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FINANCIAL RECORD. 

"WE NEED ONE THING BESIDES MORE MONEY, AND THAT IS BETTER MONEY ."-Senator Zach. Chandler. 


THURSDAY, FEBRUARY 5, 1874. 


The Financial Record will be published weekly for the 
next tkree'inonths, and may be continued beyond that period. 
It will be, as its name indicates, a record of facts and opinions 
on the questions of National Fiuance which are now so impor¬ 
tant to the American people; and all persons,editors or others, 
to whom it is sent, are invited to use it freely, and to copy from 
it without hesitation if they see tit. It will be sent free of 
postage, except to such as may choose to pay their own post¬ 
age. All editors who may receive it are invited to send their 
papers in exchange. 


Introductory. 

We propose to give hereafter from week to week 
the striking points on £he financial debates in Con¬ 
gress. 

We to-day try to state the position of the debate as 
it stands. In the House, Mr. Maynard, chairman of the 
Committee on Currency, has reported a Bill withdraw¬ 
ing the limit of the amount of National Banking capi¬ 
tal and circulation, or what is commonly called for 
“Free Banking," based upon U. S. Bonds ; and also tak¬ 
ing the first step towards resumption by directing the 
Secretary to issue two millions per month of new Green¬ 
backs, payable in two years from date, in gold to be 
exchanged for common Greenbacks which are to be 
destroyed. 

T his Bill is expected to come before the House for 
discussion about the 14th inst. 

The chairman of the committee of Ways and Means 
(Mr. Dawes) has also reported a Bill legalizing the issue 
of the forty-four millions of Greenbacks in place of 
those withdrawn and canceled by Mr. McCuUoch, of 
which about twenty-seven millions have already been 
issued, and the balance of which will shortly be need¬ 
ed for use by the Treasury, unless some other mode of 
raising funds is provided. 

This Bill is before the committee of the whole and 
liable to be called up at any moment. In the Senate 
a most interesting debate has been going on upon the 
Resolution offered by Mr. Sherman from the Commit¬ 
tee on Finance, to the effect that it is the duty of Con¬ 
gress to take such measures as will not only redeem 
the pledges of the public faith, but furnish a currency 
of uniform value, always redeemable in gold, or its 
equivalent, and so adjusted as to meet the changing 
wants of trade and commerce. The debate was ably 
carried on by Senators Ferry, Morton and Logan on 
the one side, who argued in favor of an increase of cur¬ 
rency and against resumption; and on the other by 
Senators Sherman, Schurz, Morrill, Bayard and Chand¬ 
ler for the resolution of the Finance Committee. 

We give some extracts from the speeches which have 
been made. The question is still pending, and it is re¬ 
ported that Senator Schurz is preparing a rejoinder to 
the arguments of his opponents, who have thus far led 
the attack supported by an array of figures supposed 
to prove the need of more currency, taken from the 
North American Review , the American Annual Encyclo¬ 
pedia and the Revue des deux Mondes. Senator Bout- 
well has made an eloquent speech defending the course 
of the Treasury Department and arguing against re 
sumption, but also against any inflation beyond the forty 
four millions already in course of issue. At the pres¬ 
ent moment it is supposed that the Senate, if a vote 
could be reached, would support Mr. Boutwell’s ground, 
but the daily increasing ease in the money market and 
the popular call far a steady measure of value may any 
day change the current of opinion, and bring the Sen¬ 
ate back to the position it held before the panic ; which 
was that the forty-four millions withdrawn by Mr. 
McCulloch were not held at the disposition of the Sec¬ 
retary of the Treasury. 

Without affirmative action on the part of Congress, 
the Secretary of the Treasury would find himself in a 
very embarrassing position growing out of his assump¬ 
tion of control over this fund. 


There is no exercise of power of which the Ameri- 
can people are more jealous than of any doubtful use of 
the public credit, in time of peace; and it is very desira¬ 
ble that the action of the Secretary should be either 
legalized or distinctly condemned, thus putting the re¬ 
sponsibility where it properly belongs—upon Congress. 

On the third of February, Senator Sherman reported 
a Bill from the Finance Committee, equalizing the Na¬ 
tional Bank circulation of different sections of the coun¬ 
try ; withdrawing not more than $25,000,000 from the 
sections having an excess, and giving it to the sections 
having now too little. He also reported a Bill for re¬ 
suming specie payments in gold, Jan. 1st, 1875, and pro¬ 
viding funds therefor by issuing ten-forty bonds, at five 
per cent. The Sherman bill also provides for Free 
Banking after July 1. 

More and Better Money Wanted. 

[From Senator Chandler’s Speech, Jan. 20, 1874.] 

1. Stability. 

Mr. President, I agree substantially with the re¬ 
marks that have been made on this floor in regard to 
our want of money; but we need one thing besides more 
money , and that is better money. We want more and better 
money than we now have. I shall try in the few remarks 
that I shall submit to show how we can have more and 
better money; and I shall try to be as practical as pos¬ 
sible. 

Mr. President, what the business of this nation re¬ 
quires is stability. The business of the nation will 
conform itself to almost any conceivable state of facts, 
so that those facts be permanent. It is the frequent 
changes that disturb the great business centers. It 
makes very little difference whether vour duties be high 
or low, whether your internal revenue be much or lit¬ 
tle, the business of the country will conform itself to the 
facts as they exist; but your perpetual changes de¬ 
range, disturb, overturn and destroy the business of the 
nation. Why, sir, look at the variations that have tak¬ 
en place in values within a short period. I hold in my 
hand a statement taken from a barometer as infallible 
as a weather-gage, to wit, the report of the stock, gold, 
and bond markets in the city of New York at different 
periods. First, I have the quotations of the day before 
the panic commenced, the 15th of September last, and 
then I have the quotations of four different periods be¬ 
sides that one. 

On the 15th day of September, 1873, your new 5 per 
cents were quoted at 112 1-4; on the 30th day of Octo¬ 
ber, six weeks after, they were quoted at 108; and on 
the 13th day of January, 1871, they wore 112 1-2, or a 
quarter of 1 per cent higher than they were the day be¬ 
fore the panic commenced. These are facts that are 
worth studying, for they show that such a degree of 
change must be absolutely disastrous to any business 
that can be transacted. 

* 2. Specie Payments. 

Mr. President, I am for expansion, and a larger ex¬ 
pansion than any other man has proposed upon this 
floor. I am, at the same time, in favor of improve¬ 
ment as well as expansion. The best time for the re¬ 
sumption of specie payments that has occurred since 
the suspension was in 1865, at the close of the war, 
when gold had fallen from over 200 to 122. In a few 
days values had shrunk, and the people of the nation 
were comparatively out of debt, and were ready then 
for a resumption of specie payments; but the Govern¬ 
ment was not. The Government owed more than 
$1,000,000,000, that was maturing rapidly, maturing 
daily, in the shape of compound interest notes, seven- 
thirties, and other obligations, that must be funded or 
disposed of. Hence the Government was not prepared 
for specie payments at that time, although the people 
were. The people were out of debt all over the coun¬ 
try. They had obtained high prices for everything 
they had to sell during the war. The farmers were out 
of debt, the business of the country was transacted for 
cash, and the whole country was comparatively out of 
debt; but the Government was not. The Government 
owed over one thousand millions of debt that was ma¬ 
turing within a very short time, and must be funded 
or in some way taken care of; and, therefore the Gov¬ 
ernment at that time was not ready for the resumption 
of specie payments. From that day to this we have 
been drifting and floating further and further and fur¬ 
ther away every hour from the true path, to wit, the 
resumption of specie payments. 

3. Suspension a War Measure. 

Mr. President, the men who have your bonds are not 
the men w r ho want more money. If a man has the 


bonds to-day, he can get greenbacks for them and ge^ 
them at the high figures that I have just read—a large 
percentage higher than the price paid by the Govern¬ 
ment for them during the panic. Mr. President, you 
cannot now, and you never can, and you never ought 
to, turn the Treasury of the United States into a brok¬ 
er’s shop. It is no part of the business of this great 
Government to issue an irredeemable currency. We 
cannot afford to place ourselves beside the worn-out 
governments of Europe; we cannot afford to place our¬ 
selves on a par with Hayti and Mexico ; we are too 
rich a people to do it; and it is a disgrace to us as a 
nation that we have allowed it to continue one single 
hour beyond the hour when it was in our power to 
remedy the wrong. 

Much stress has been laid upon the fact that the 
Bank of England remained in suspension for twenty- 
one years, and it has been alluded to over and over and 
over again in the course of this debate. It is true that 
the Bank of England did remain in suspension for 
twenty-one years; but it is equally true that for six¬ 
teen years out of those twenty-one England was 
at war with France, and was subsidizing nearly all the 
governments of Europe; but within five years from the 
close of that war she resumed specie payments, and has 
continued them ever since. 

Mr. President, the proposition to increase the volume 
of your paper currency is a step in the wrong direction, 
and I for one am utterly opposed to taking even one 
step in the wrong direction when I know what the right 
direction is; and I hope that no resolution will pass this 
body authorizing an increase of the volume of the pa¬ 
per currency, even to the amount of $44,000,000, or 
$25,000,000, or $1,000,000. We have fixed the sum at 
which it shall remain, and I trust it will there remain, 
and that no step will be taken toward an expansion. 


The Laborer is the Victim of our Currency. 

REMARKS OF MR. J. M. FORBES OF BOSTON. 

The same day on which Senator Chandler made the 
speech in the Senate, from which the above extracts 
are made, Mr. J. M. Forbes, of Boston, appeared be¬ 
fore the House Committee on Banking and Currency, 
and made a statement concerning which the Boston 
Herald thus remarks: 

Mr. Forbes of this city cleverly stated in Washington 
the other day the interest of the laboring man in a 
sound currency. When we hear workingmen asking 
for “cheap money,” more currency, with an idea that 
it is just the thing they need, and that with an abund¬ 
ance of paper money in circulation everybody- will 
have a pocket full, and poverty will be abolished, we 
cannot help feeling that they know not for what they 
ask, namely, that the equivalent which they get for 
their labor shall be reduced in value. There are two 
classes to be benefited by infiation of the currency—debtors and 
speculators. The debtor knows that if money’ is reduced 
in value he can pay his debts easier than if it retains 
the value it had when those debts were incurred. That 
is to say, inflation pays a part of his debts and cheats 
his creditors. The speculator finds liis opportunity in 
the fluctuation of prices caused by inflation It makes 
all kinds of business games of chance. The legitimate 
merchant is bothered because he cannot tell what he 
/:an get for his goods three or six months after he buys 
them, but it is upon these changes that the speculator 
lives. He is as likely to lose as to gain; his fortune 
fluctuates like the prices of merchandise or stocks; 
he is a mere gambler; but speculation goes on and 
production languishes. Now the workingman may 
owe a bill at the store, but his class is not a debtor 
class. It is a creditor class. All the labor that is in 
a man is his—paid for. He has it t» sell, and will in 
the course of his life realize on all the labor that he 
disposes of. He is a perpetual creditor. It is important to 
him that he shall get his pay in good money. He must use 
what money he gets to pay for his living, and all his¬ 
tory teaches that in case of an inflation of the currency 
labor is the last thing to appreciate. Stocks go up, 
merchandise of all sorts goes up, then real estate, and, 
last, labor. But labor never appreciates in proportion 
to other things, because it cannot be “cornered” and 
speculated upon. The laboring man can never be a 
speculator; he cannot buy in advance and wait for a 
rise. Every dollar m.ide by the speculator in that way 
ultimately comes out of the wages of labor. 

The following is the portion of Mr. Forbes’s state¬ 
ment referred to by the Herald. To this we append 
an extract from his cross-examination by the Com¬ 
mittee. 

There is not a shadow of doubt that the hard handed 




















THE FINANCIAL RECORD 




2 


laboring producer has the first and deepest interest in 
returning to a round currency. 

Mr. Nourse has shown that the laborer is by far the 
largest creditor. He estimates that there is on the aver¬ 
age one thousand million of dollars in the savings 
banks and other trusts, and in the little personal hoards 
of the working man; and another thousand millions 
due him trom his employers on his back pay roll; but be¬ 
yond this he is totally unable to take advantage of the 
fluctuation of prices caused by a rise and fall in irre¬ 
deemable paper money. 

From the Wall street or State street speculator down 
to the country store keeper, every one but the laborer has 
some chance to catch the ball on the bound and projit by the 
fluctuation. 

The laborer who creates the greater part of the an¬ 
nual wealth of the country must take the prices which 
are fixed upon him when his weekly or monthly pay 
roll comes round. 

The capitalist, who chooses to speculate, can make 
more money out of a fluctuating currency than out ot 
a steady one. He does it, of course, at a greater risk, 
and some of the players will always go under, while 
others come out millionaires; but the sure victim, the resid¬ 
uary legatee of all the blunders of our gambling system is the 
laborer. 

Prices fall for him latest while they rise soonest. 

So much for classes, now for sections. 

While every steady producing industry suffers by an 
unsteady currency, and by prices bandied about by 
speculators, the West and the South, being mainly de¬ 
voted to agriculture, suffer most. 

Everything which they produce and sell is measured 
in value by the export price, or, in other words, by 
gold, while every article they buy is paid for in prices 
based on paper, which are very much higher than the 
premium on gold. 

Authorities disagree as to what this difference in 
price is, but those best informed put it at between 20 
and 30 per cent, higher prices than the mere premuim 
on gold, which is all they get on their sales of produce 
based on gold. 


Congressional Conundrums. 

Mr. Mitchell. State whether, in your opinion, it is 
desirable to legislate at all upon the subject of finan¬ 
cial panics, which may happen once in ten or fifteen 
years ? Is it not better for the government to disre¬ 
gard these things and confine itself to providing a 
sound convertable currency ? When we have done 
that, have we not done the best we can to prevent 
panics 1 

Mr. Forbes. Evidentlyl can see no possible good the 
government can do by standing by as a dry nurse to the 
commercial community. 

Mr. Farwell. We have a bill before the committee 
authorizing the Secretary of the Treasury to prepare, 
I think, fifty millions ot greenbacks to be laid aside 
fora special purpose, namely: for issuing at eight or 
ten per cent interest, only when required to tide over 
just such a panic as occurred in September—what 
would you think of such a proposition as that ? 

Mr. Forbes. 1 should have a general fear of giving 
such a power to the Secretary of the Treasury, or any 
government officers to regulate our affairs. I should 
almost as soon put a Secretary for the weather to pour 
out rain when we wanted it. 


Senator Logau’s Views. 

On the 19th of January, Gen. Logan, of Illinois, 
made a long speech in the Senate, announcing different 
views, as follows: 

In Chicago, at the time of the panic, when commer¬ 
cial paper would not do, when you had to wait for the 
express to come from New York to Chicago to bring 
currency to keep a bank from going under, the hour 
when the clearing-house would close was noticed ju»t 
as the breathing of a dying man. Suppose when you 
stretch further out, and you have to depend upon a 
great commercial center in a crisis like this, five min¬ 
utes sometimes destroys a bank or a banking institu¬ 
tion if they cannot pass the clearing house at the very 
moment. 

And yet men will argue that this makes no differ¬ 
ence. It does make a difference. The currency of a 
country wide-spread like this should be so far beyond 
that which is in reserve and held back as to transact 
the business of the country in connection with the com¬ 
mercial paper and credit of all kinds used, and should 
be at least distributed in the different parts of the 
country, so as to relieve the wants and necessities of 
trade. 

From the facts, Mr. President, which I have obtain¬ 
ed from the best sources at hand, the following con¬ 
clusions are clear to my mind : 

First. That assuming gold as a standard of value 
gives no assurance that the value affixed to the unit 
will remain fixed and permanent; because, possessing 
no power of contraction or expansion, it cannot adapt 
itself to the increasing or decreasing wants of com¬ 


merce ; therefore this relation can only be established 
by change in price of the products ot trade. 

Second. That there is a ceriain relation between 
the volume of currency to the amount of commerce 
and business which cannot be reduced without finan¬ 
cial disaster. 

Third. That the amount of gold in this country, 
which at the highest estimate dues not exceed $150,- 
000 000, is wholly inadequate to afford a sufficient me¬ 
dium of exchange. 

Fourth. That an attempt to resume specie pay¬ 
ment must inevitably bring financial ruin upon the 
country 

Fifth. That the examples afforded by other enlight¬ 
ened nations, and the experience of our own country, 
make it clear that the volume of currency in calcula¬ 
tion in this country, sufficient to meet the wants of 
trade, should be at least $890,000,000. 

And therefore I give it as my firm conviction, after 
a somewhat caretul study of the subjecr, that there 
should be a moderaie increase in the amount of curren¬ 
cy, and that it is the duty of Congress to inaugurate 
some measure looking to this end. 

I shail therefore vote tor the resolution of the Sen¬ 
ator from Michigan, (Mr. Ferry), in place of the res¬ 
olution reported by the chairman of the Committee 
on Finance. 


Does the West Need More Currency? 

Senator Schurz, like Senator Logan, represents a 
Western State and an agricultural section of the coun¬ 
try. This is what Carl Schurz says about specie pay¬ 
ments in the West: 

The economic interest of the West is mainly agri¬ 
cultural. The Western people are, by overwhelming 
preponderance, a farming population. Their whole 
prosperity depends upon the successful and profitable 
cultivation of the soil. If it is true that the farmer, for 
all the necessaries he had to buy, had to pay prices 
blown up by our irredeemable and rAlundaut curren¬ 
cy, even far beyond the point to which the tariff alone 
would have driven them, while the prices of almost all 
the staples he had to sell were regulated by a foreign 
market, untouched by home inflation, governed by a 
specie measure of value, and exposed to the free com¬ 
petition of the world—if that is true, and I trust nobody 
will deny it, must it not be equally true that the farm¬ 
ing interest, and through it the whole western coun¬ 
try, will not only not be injured, but be vastly benefited, 
by a resumption of specie payments, which will greatly 
reduce the prices at which the farmer has to buy 
his necessaries, while not reducing, but greatly increas¬ 
ing, the purchasing power of the crops he produces and 
has to sell ? And will not this immense advantage in 
fact vastly overbalance any possible amount of loss 
which might be suffered in consequence of temporary 
indebtedness, and which by prudent managment may 
be made very small ? 

I hear it said that there are a great many farmers 
whose farms are covered with mortgages, and who 
would be greatly injured by specie resumption, inas 
much as the money in which they would have to pay 
off the mortgages would be of higher value than the 
money in which they contracted the debt. But how 
can they expect to pay their mortgages unless they de¬ 
rive the necessary profit from their farms'? And how 
can they derive that profit from their farms if they con¬ 
tinue to labor under the same disadvantage, having to 
buy at high prices and to sell at prices that are low ? 
Moreover, what will be the consequence if we inflate 
the currency still more ? Will not, by the operation of 
the same laws, the farming business be still more de¬ 
pressed? Will not, in consequence of the still aggra¬ 
vated disadvantage of buying at high and selling at low 
prices, the mortgages accumulate upon their farms in a 
worse degree than heretofore, and w hen, then, the day of 
settlement comes, will not their discharge be more diffi¬ 
cult than ever ? I insist, therefore, that the agricultural 
interest, and with it the whole West, and the South, 
too, which were never benefited, but always injured 
by inflation, and will be still more grevously injured 
by further inflation, will not in any way be injured, but in 
every respect be vastly benefited by a return to specie payments ; 
and if I stood upon this floor not as the advocate of the 
interests of the whole country, but as a mere advocate 
of western interests, I would advocate specie payments 
with no less zeal than I am now doing. 


Carl Scliurz’s Way to Stop Excessive Im¬ 
portation. 

The junior Senator from Indiana, [Mr. Pratt], gave 
us the statistics of our extravagant importations of 
luxuries, to show how difficult the resumption of specie 
payments would be if we continued to export specie 
for luxuries at such a rate, and then he exclaimed, 
“Look at this list, and who shall say that we are not the 
most extravagant people under the sun, trampling under 
foqt all wise economic laws?” That was very well 
spoken. The Senator was right. But then he went 
on advocating an increase of our irredeemable currency; 
and now what will he answer when 1 show him that in 


making that proposition he did some of that trampling 
under foot ot all wise economic laws himself? He evi¬ 
dently did not consider that an expansion of the 
currency is always accompanied by an increase of im¬ 
portations. Here I hold in my hand a table showing 
that in thirty years, with the exception of only two, 
which exception c*n be explained upon other grounds, 
the importation of goods from abroad has continually 
and most strikingly corresponded with the expansion 
of our currency, and rice vtisa. This fact stares us in 
the face. It is impossible to question it. 

This being so, il the Senator from Indiana wants to 
reduce the extravagance of importations, he should 
insist upon contra lion and not upon expansion. If 
the Senator is disturbed by our extravagant importa¬ 
tions now, what will he have to say when more paper 
money is issued, and the importations become more ex¬ 
travagant than ever? There is another instance of 
your return to specie payments by “prosperity through 
inflation.” It is exactly like the advice to drink brandy 
in order to get sober .—Speech in the Senate, Jan. 14,1874. 


The Legal Tenders a Forced Loan. 

[From Senator Schurz’s Speech.! 

The Senator from New Jersey, |Mr. Frelinghuysen,] 
called the emission of legal-tender notes “a forced loan.” 
Tnia expression, “a forced loan,” has been called a 
mere empty figure of speech; but in my opinion it is 
something better than that. 

The Government issued legal-tender notes to buy com¬ 
modities in a great variety of forms, including labor 
and service. It gave for those commodities not money, 
but its promises to pay money; and of those who tor 
such promises to pay sold anything of value to the 
Government, the latter thus borrowed the value of the 
things so sold to it. This virtually constituted a loan. 
The seller was obliged to take the legal-tender notes 
for what he had to sell, because he could not get any¬ 
thing else in payment. He had to sell for what he 
could get or keep his goods. And thus the issue of le¬ 
gal-tender notes constituted a forced loan; and the Gov¬ 
ernment promised to pay, bearing no interest, it con¬ 
stitutes a forced loan without interest. Soon these 
Government promises to pay, made a legal-tender in 
the payment of debts, went from hand to hand, and 
became the only current medium of exchange in all 
business transactions, and the whole American people 
stepped into the places of the original lenders to the 
Government. Thus the issue of legal-tender notes became 
a forced loan, without interest, levied upon the American peo¬ 
ple. This, I think, is clear. It carries with it, there¬ 
fore, all the obligations of a forced loan, such obliga¬ 
tions being aggravated by the fact that not only the 
loan did not bear any interest to the creditor, but it im¬ 
posed further mss on the creditors by the depreciation 
of the Government promises to pay in the market. 

Now, what is that obligation, prima facie ? The in¬ 
scription of the legal-tender note is, “The United States 
will pay to the bearer one dollar.” We all agree that 
it means one dollar in the gold coin of the United 
States. That one dollar in the gold coin of the United 
States the Government promises to pay; when f It 
has very wtll been said, and not denied, that the form 
of the legal-tender note is the same which in private 
transactions would be considered that of a due-bill, 
payable on the demand of the creditor ; and that such 
demand, as between private parties, can be enforced 
by legal process. It has been argued in reply that 
such a demand may, indeed, be enforced by process of 
law as against private parties, but that it cannot be 
enforced against the Government; and that, therefore, 
the Government is not under any legal obligation to 
pay its promit e to pay on demand. 


Humors of Finance, 

A STORY OF UNCLE ABE’S. 

When Mr. Chase first brought to Mr. Lincoln’s no¬ 
tice his financial scheme for carrying on the war by 
legal tenders, it is told that the President replied, “Why, 
Chase! you think this is a new way of paying old 
debts; but it reminds me of the poor fellow who was 
stopped by a robber in a dark alley, with a demand for 
his purse. “ ‘Good Lord !’ said the frightened traveler, 
I haint got nary red, but just step with me to the 
street .amppost there, and 1’L give you my note on de¬ 
mand which will do just as well.”’ Mr. Chase man¬ 
aged to get out a great many of his notes on demand, 
but Uncle Sam has so far paid “nary red” on them. 


The Financial Record is published by the Finance De¬ 
partment of the American So ial Science Association, at 
their offices in New York and Boston. All comTiunications 
respecting it may be addressed to the Secretary of the Asso¬ 
ciation, F. B. Sanborn, No. 5 Pemberton Square, tRootn 21;, 
Boston; and all exchange papers, public document-*, etc., may 
be forwarded to the same address. It will be issued weekly 
during the months of February, March and April, and will be 
sent gratis to all who will remit the postage for one quarter, 
whioh i* Five Cents. 






















FINANCIAL RECORD. 

“ WE NEED ONE THING BESIDES MORE MONEY, AND THAT IS BETTER MONEY.”—Senator Zach. Chandler. 


VOL. I. THURSDAY, FEBRUARY 14, 1874. NO. 2. 


The Financial Record will be published weekly for the 
next three months, and may be continued beyond that period. 
It will be, as its name indicates, a record of facts and opinions 
on the questions of National Finance which are now so impor¬ 
tant to the American people; and all persons,editors or others, 
to whom it is sent, are invited to use it freely, and to copy from 
it without hesitation if they see fit. It will be sent free of 
postage, to all persons who will remit 50 cents to the publishers 
at No. 5 Pemberton Square, Boston. All editors who may re¬ 
ceive it are invited to seud their papers in exchange. 


The Spirit of Congress. 

The financial question has received but slight atten¬ 
tion from Congress during the past week, the Senate 
having been occupied most of the time with the amen¬ 
datory bankrupt bill, and the House with the army 
appropriation bill. 

Mr. Kasson of Iowa has laid before the Ways and 
Means Committee of the House a new plan for resump¬ 
tion, the leading idea of which is the redemption of 
legal tenders in coin at a fixed rate—say $100 in coin 
to be given for $110 in notes, the difference between 
coin and paper to be regularly diminished at intervals 
of four months until it disappears altogether. The bill 
does not expressly provide for the destruction of green¬ 
backs so purchased at a discount, and indeed it implies 
that they may be re-issued. Under this bill, too, the 
government would be in the position of formally dis¬ 
crediting its own promises to pay, and yet constantly 
issuing more of them. 

Saturday was as usual, given up to general debate, 
by the House and several speeches were made on the 
currency question, Mr. Crittenden of Missouri pre¬ 
sented the “Wealth and Wants of the West,” represent¬ 
ing its wealth to be in its abundant resources, its want, 
more money. At the end was an argument for a redistri¬ 
bution of national bank currency, and the issue of more 
greenbacks. Mr. Crittenden’s speech was garnished 
throughout with apt Scripture quotations. Tor exam¬ 
ple, he answered the opposition of the East to water¬ 
ing the currency by quoting, “Doth the wild ass bray 
when he hath grass l or loweth the ox over his fodder ?” 
Mr. Yance of North Carolina, in a speech on taxation, 
incidentally favored an increase of the currency, say¬ 
ing that “there is not money enough in the country, 
and particularly in the South.” Mr. Ivelley of Pen- 
sylvania again took the floor in favor of his 3.65 con¬ 
vertible bond proposition, reading and commenting 
upon an article published in the New York Tribune, in 
1871, written by Mr. Greeley, in support of this propo¬ 
sition. Mr. Wilber of New York closed the session in 
a short speech favoring the issue of the $41,000,000 
called “reserve,” temporarily, and in case of emergency 
only; opposed the accumulation of gold by the sale of 
bonds, but advocated higher .duties on imports, the 
retention of coin thus received, and a system of free 
banking. 

Senator Boutwell of Massachusetts has introduced a 
bill to amend the national bank act; forbidding the 
payment or receipt of interest on deposits by national 
banks, as between each other, and enacting that not 
more than one-fourth of the reserve of any national 
bank shall be in the custody of its redemption agency. 

Monday was “bill day” in the House, but the crop 
of new financial bills was unusually small. On Wed¬ 
nesday the Senate took up Senator Sherman’s bill, re¬ 
ported by him from the Finance Committee, provid¬ 
ing for redistribution of the national currency. An 
amendment was adopted allowing the issue of $25,000,- 
000 currency to national banks in states that have not 
their legal proportion, before as much is withdrawn 
from banks in States having an excess. The bill was 
weakly opposed by some senators who demand a sys¬ 
tem of free banking, and more vigorously by others 
who fear injury to the bnsiness of the commercial States. 
The speakers were generally drawn into sectional con¬ 
troversies, and did not discuss principles. It is general¬ 


ly believed that the bill will pass. No progress has 
been made with the other bill introduced by Senator 
Sherman, for gradual resumption and free banking. 


The Currency Question. 

MR. NOUKSE’S LETTER TO COL. ABLE. 

[In tlie early part of February, Mr. B. F. Nourse, of Boston, 
wrote a letter to Col. Barton Able, of St. Louis, on the currency 
problems now agitating the people of tke country, East and 
West. A portion of this letter we this week copy for our read¬ 
ers, and will give them the remainder in another Record.] 

The great body of the people, as well as Congress, 
Boards of Trade, etc., just now regard the question of 
the currency as the most important one of the day. 
Diverse and directly opposing as are the views of reme¬ 
dy, nearly all acknowledge that something is wrong, 
and in the opposing remedies nearly all seek the same 
result, which is best expressed by the words “cheaper 
moneyand to have it cheaper, one side, the prepon¬ 
derating one in the West, if not in the South, would 
have more currency. The two Senators from Missouri 
fairly represent the two opposing views of remedy. 
Now one is right and the other wrong, where both de¬ 
sire one result through opposite means. 

I have the opinion—and seem to be almost alone in 
it—that these wide differences exist only because of the 
misapprehension of effects to follow certain measures. 
Too many do not understand that what they ask would 
not give what they want; while their opponents, right 
enough in theory, too often spend all their force in theo¬ 
ry, and fail to make clear its practical application to 
existing conditions, so as to show that what they offer 
will give just what the others desire. 

It seems clear that every day of delay and debate at 
Washington is reducing the chance of, as well as the 
desire for an increase of irredeemable paper currency. 
Yet there is need tor greater and more rapid change. 
It needs that you business men of St. Louis, as well as 
those of Chicago, Milwaukee, and other Western cities, 
shall do what we did here two years ago,—get up de¬ 
bates in your Boards of Trade, etc., in which the strong¬ 
est men of both sides shall participate, and thus both 
arouse and enlighten the people. Never fear but what 
the truth will gain ahead every day the debate contin¬ 
ues. The result, embodied in resolutions, and these 
sent to Washington, would be of telling effect, and, in 
some cases, would relieve Senators and Representatives 
from a dilemma now existing, wherein they must vote 
against either (what they believe to be) the will of their 
constituents or their own new convictions. 

None, better than yourself, can set forth in good clear 
terms, the great obligations of public faith; the exist¬ 
ing degradation of our place among insolvent nations ; 
the mockery of calling a dollar that which is only a 
promise to pay a dollar (and that at no definite time); 
and the other points wherein our standing among the 
nations of the earth is not what any man proud of his 
country should wish, because of this false currency. I 
have heard you state all this in a few concise words. 
But I wish to invoke your power of saying things well, 
in the good work of explaining practical effects, so that 
men, having heard you, will know what to ask Congress 
for. 

“Give us more currency” is the prayer of specula¬ 
tors conducting great schemes that require much bor¬ 
rowed money, and of men already deeply in debt, who 
want an inflation of fancy prices to help them out. 
But, passing by all such, we hear the same cry from a 
large portion of the more industrious and enterprising 
of the people in some sections of the country. These 
want more money for laudable and profitable purposes 
in utilizing and developing the great natural resources 
of wealth that are around them. The want is reason¬ 
able, and to supply it would be beneficent to them and 
to the whole country. They see the interest rate is 20 
to 24 per cent in Kansas City, on local securities deemed 


perfectly good, while in Boston good paper is sought 
for at 6 to 8per cent; but they do not see why it is 60 
and must be so. Looking further, they might see that 
in London and Amsterdam money is loaning at 2 1-2 
to 3 per cent, on securities no better than those which 
in Boston can get it only at 6 to 8 per cent. The law 
which makes this difference between London and Bos¬ 
ton, is the same law of finance which makes the differ¬ 
ence between Boston and Kansas City. It rests upon 
the proportion which the amount of loanable capital 
at any point bears to the demand for the use of that 
capital. For many centuries the great commercial cit¬ 
ies of Europe have been accumulating wealth, until it 
is largely in excess of the total of profitable uses at 
home. A part of it is loaned to other countries, but 
the greater portion is used or loaned at home on very 
low rates of interest So in less degree of Boston, 
where, from very small beginnings, wealth has been 
slowly accumulating for two centuries and a half. 
Her uses for capital in proportion to the amount owned 
are so much larger than are similar uses in Amsterdam, 
that her interest rate averages about twice that in the 
Dutch city. The new Kansas City just springing into 
being, has not had time to accumulate wealth—wealth 
to loan. There, one sees a dozen profitable uses for 
every spare thousand doUars. l r et in its brief score of 
years Kansas City has made more progress in acquir¬ 
ing wealth than Boston made in her first half centnry 
or longer. As acquired, it has gone into such invest¬ 
ments as would pay best and were most needed, and 
these were fixed forms chiefly. One cannot eat his 
pudding and have it too; and the enterprising men of 
Kansas City could not erect their warehouses, mills, 
shops, foundries,and open their mines and other works of 
improvement, and yet have in hand the money expended 
for them. Having these works, they want money to make 
them most productive, to build other works, to drive 
trade, to foster growth, and develop the latent wealth 
that is in field, forest and mine. 

Now the basis of all loanable money is capital. Cur¬ 
rency is not capital. Irredeemable currency is not 
even money, but only a certificate of debt. Under our 
national bank law, tlie more bank currency toe have, the less 
capital will there be to loan—the less loanable money. The 

bonds, $1,000,000, required to be deposited for an issue 
of $900,000 currency are worth at least $1,120,000. The 
bank invests in bonds $220,000 more than the amount 
of currency received. Then it must hold a reserve 
against the circulation, 15 per cent in the country bank 
or 25 per cent in the redeeming cities, an average of 
over 20 per cent, say $180,000 in legal tenders, against 
the $900,000 in circulation. Therefore it is that of ev¬ 
ery $1,120,000 invested in bank currency there is $400,- 
000 dead capital. Before the investment the whole 
$1,120,000 was loanable; after the investment only 
$720,000 can be loaned. It is profitable to the capital¬ 
ist who gets tlie interest on his $1,000,000 bonds, and 
then the interest on his $720,000 of circulation, besides 
profits on his deposits. But certainly it is so much tak¬ 
en out of the loanable capital of the community that 
puts in the capital for the bank. 

Clearly, then, the more bank currency we have, the 
less money will there be to loan. For the benefits of 
the business enterprise of New England, it would be 
well if Congress should make a law reducing her circu¬ 
lation one half. It would increase her active capital 
by the amount now locked up in that half. And so of 
any cities of the West and South, if they have more ac¬ 
tive capital than can be profitably employed in the 
promotion of business enterprise, by all means let them 
have new banks with any desired amount of bank cur¬ 
rency. It will rapidly lock up the spare cash ; and if 
it goes far enough, this may be found; that with a great 
excess of currency, there is no money to lend, and, as a 
consequence, such high rates of interest, and distress 
because money cannot be hired at any rate of interest, 
as would drive many concerns to insolvency. 

Just here it should be noted that false money,—that 
is money not redeemable, however secure its ultimate 
payment,—will drive out of use and keep out true 
money, or that, which to all the world is a standard of 
value, gold and silver coin. Increase of paper curren¬ 
cy delays the lime when that will come back ; and a 
reduction of the paper money, until it becomes insuffi¬ 
cient for the ordinary business exchanges, would cause 































THE FINANCIAL RECORD. 


4 


it to appreciate so that gold would come in to supply 
the want. 

Very little actual money of any sort is required for the 
business exchanges or clearings of the whole country. 
Aside from the daily pocket money of the people, that 
employed in the actual trade, and that used for payrolls 
and other wages—these three being to a great extent 
one and the same thing,—probably not more than one 
dollar of currency is used for every fifty dollars of 
transaction, the remainder being settled by drafts, 
checks or other transfers of balances. For obvious 
reasons this method of adjusting exchanges without 
money cannot be practiced here to the extent that it 
is in England. Yet it is so done here far more than 
among the people of France. The more thoroughly 
credit is utilized, the less is the need of passing money; 
and this is most effective when one cause of distrust of 
defective credit, is removed by the use of true money. 
Hence it is that a smaller amount of currency having 
the purchasing power of gold, and always exchangable 
for gold, would be more efficient than a much larger 
amount of irredeemable paper currency, because of its 
self-accumulating power, its capacity of diffusion where 
wanted;.and because of the confidence which it in¬ 
spires. 

Do we Want More Martin Skins, or More 
Beaver Skins? 

An old trader to the northwest coast of America, 
in the early part of this century, tells the following ti ue 
story: 

When he first traded with the Indians along that 
coast, he found this currency consisting of a certain 
kind of martin skins about the size of his hand. These 
varied in value according to certain markings and col¬ 
ors on the fur, the more rare being the more valuable; 
but, on the average, one of these little martin skins 
being good money for a first class beaver skin, then 
worth in the civilized world, about §60 in gold. 

It occurred to our shrewd friend, that, at the great 
annual fair at Frankfort, in Germany, he could get a 
supply of cheap martin skins. He accordingly sent 
home samples of the favorite kinds, the $-10, §50 and 
$60 bills of the natives, which his owners forwarded to 
Germany, and bought a quantity of these little furs at 
something under a dollar apiece. 

On his next voyage to the coast, the captain, in addi¬ 
tion to his stock of glass beads, powder and blankets, 
carried out his new supply of currency. 

Arriving at the principal southern trade point, he 
|L« hoisted the signal for trade, and soon the Indians ap- 
peared with their accumulated stock of beaver skins 
\ and other furs. Waiting until all the principal chiefs 
had displayed their stocks, he gradually and carefully 
brought out his supply of bank bills, (otherwise, martin 
skins). Trade was soon brisk,—a few days exhaust¬ 
ed the stock of furs at that point, and he left in circu¬ 
lation a quantity of martin skins in their places, as yet, 
very little depreciated in value. 

Hoisting sail, he pushed for the next port so as to 
keep ahead of his circulating medium. Here he played 
the same game, and passed on, gradually, however, 
finding it necessary to pay a higher price for his 
beaver skins in the peculiar currency. 

Having gathered the first harvest, he now slowly re¬ 
traced his course down the coast. At each port where 
he had been he found that beaver skins had risen, or 
currency fallen, (whichever way we may choose to 
to put it), until, when he was ready to turn home¬ 
ward, it appeared that, in a few months, he had so far 
changed the currency of the whole coast, that it took 
sixty martin skins to buy the one beaver skin, which on 
his arrival could be bought for one first class martin 
skin ! 

To-day the deluded people here are clamoring for 
more martin skins. Shall we go on, until, as in the old 
continental times, a man may take out a bushel basket¬ 
ful of greenbacks, and bring home his dinner bought 
with them in a peck measure 1 ? Martineau. 

Humors of Finance. 

The older inhabitants of Boston, have many recollec¬ 
tions of a certain French shopkeeper, familiarly known 
as Johnny Lepine. On one occasion a customer found 
Johnny in high glee. “Ah!” said Johnny, chuckling, 
“I’ve made $10 000 this morning!” “How is that, Mr. 
Lepine V’ “Oh ! I’ve just been going over my shelves 
and have marked up all my prices twenty per cent, 
which comes to more than §10.000.” 

Are there not a good many Johnny Lepines who 


want twenty per cent of water put into our currency, 
so that they can thus mark up their stocks on hand, 
and think themselves the richer for the false measure ? 


The Cancelled Forty-Four Million. 

[From a Speech by Senator Bayard, of Delaware.] 

The policy of contraction was illustrated by the pas¬ 
sage of the act of the 12th of April, 1866, which provi¬ 
ded— 

That of United States notes not more than $10,000,000 may be 
retired and canceled within six months from the passage of 
this act, and thereafter not more than 4,000,000 in any one 
month. 

And under that direction and authority the Secreta¬ 
ry of the Treasury continued to reduce the amount of 
circulation until January, 1868. He had by that time 
reduced the amount of outstanding notes $44,000,000. 
They had been “retired and canceled,” as the public 
supposed and 8s the law directed. In January, 1868, 
the speculators raised aery, and Congress gave tempo¬ 
rary aid by stopping the contraction. They did that 
by a bill declaring— 

That from and after the passage of this act, the authority of 
the Secretary of the Treasury to make any reduction of the cur¬ 
rency by retiiing or cancelling United States notes shall be, and 
hereby is, suspended. 

But by the time of this interference by Congress in 
this declared and steadily followed policy, the Secreta¬ 
ry had reduced the volume of currency by canceling 
and retiring $44,000,000 United States notes. If the 
country doubted the power of Congress to issue such 
notes and make them legal-tender, and looked on in 
wonder when the Supreme Court decided such a pow¬ 
er did not exist, and at the same time reversed its own 
decision with what amazement did we behold the issue 
in 1872 of §5,000,000 of irredeemable paper money, 
and in 1873 of the issue of $28,000,000 by the Secretary 
of the Treasury, upon his sole individual discretion and au¬ 
thority, without warrant of law — nay, against the plain letter 
the law ! 

Let us go a little further. When Congress decided 
to stop this policy of contraction, when the speculators 
of the country found that it was interfering with their 
transactions, Congress did it, and they showed that 
they knew how to do it in fit and proper language. 
The act of February 4, 1868, provides— 

That from and after the passage of this act, the authority of 
the Secretary of the Treasury to make any reduction of the cur¬ 
rency, by retiring or cancelling United States’ notes, shall be, 
and is hereby, suspended. 

It would seem that the words there were plain enough 
for any man who understands English to know what 
was the intent and meaning of “retire” and “cancel.” 
It was the reduction of the volume of currency. But 
what else follows 1 

But nothing herein contained shall prevent the cancelation 
and destruction of mutilated United State’s notes, and the re¬ 
placing the same with notes of the same character and amount. 

Sir, there is no rule of construction more universal¬ 
ly accepted than that “the expression of one thing is 
the exclusion of anotherand when Congress, speak¬ 
ing of reducing their debt by the cancellation of notes, 
said that it should cease, and then provided for the can¬ 
cellation and destruction of mutilated currency, and 
said it should not cease, but it should be replaced by 
notes of the same character and amount, it would be 
an abuse of terms—it would be an affront to the com¬ 
mon sense of men—to suppose that it was not the in¬ 
tent plainly expressed, that when you said “retired 
and cancelled,” you meant retire and cancel, and not 
reissue, unless reissue was expressed upon the face of 
the same law. Why, Mr. President, if this case were 
to arise between private citizens in the courts of this 
country; if I had authorized my agent to issue prom¬ 
issory notes for me, and it was published that his limit 
was to a certain amount, and then I called him again 
as publicly to retire and cancel those notes, and he had 
retired, and he had cancelled them, where would be the 
court, where would be the jury, where would be the 
law of common sense, of justice that would hold me 
bound for the act of my agent when he reissued those 
cancelled notes, and said that I had given him implied 
power to do so 1 

I will only say, that for alleged violations of law far 
more technical, far less flagrant, this Senate, upon the 
motion in part of the Honorable Senator from Massa¬ 
chusetts, then a member of the other House, have, with¬ 
in a few years, summoned the chief Executive Officer 
of the United States to their bar to plead in answer to 
an impeachment. 

Mr. Boutwell. I think the Senator from Delaware 
has not observed the express authority in the act of 
March, 1863, to reissue in place of notes canceled. 

Mr. Bayard. That power was controlled by subse¬ 
quent legislation. 

Mr. Boutwell. Will the Senator allow me to read it t 

Mr. Bayard. Yes, sir. 

Mr. Boutwell. I only desire the Senator to see the 
whole case: 

And in lieu of any of said notes, or any other United States 
notes returned to the Treasury and cancelled or destroyed, there 
may be issued equal amounts of United States notes, such as 
are authorized by this act. 

Those were legal-tender United States notes—what 


are known as the greenbacks. Now, then, the point, 
and the only point, I wish to make is, that by implica¬ 
tion that statute could not be repealed by the satute 
limiting the reduction to $356,000,000. 

Mr. Bayard. Mr. President, all statutes in pari mate¬ 
ria are to be construed together; and if in 1863 there 
was a statute relating to the currency, providing for 
its volume to a certain extent, and in 1866 there was a 
statute passed in direct words for the reduction of the 
volume of that currency by retirement and cancellation, 
who shall doubt that the law later in date must and 
shall prevail. 


The Workingmen ancl the Currency, 

It is interesting to observe that those newspapers 
which are particularly addressed to the workingmen of 
the country, such as the New York Sun, the Philadel¬ 
phia Ledger, and the Boston Herald, agree in maintain¬ 
ing that the best currency for the workingman is one 
based on gold and silver. We quoted in our first num¬ 
ber what the Herald said, and the Sun takes much the 
same view. Here is something from the Ledger —the 
daily newspaper of largest circulation in the country : 

In our opinion the most effective way of setting the 
deranged industry of the country at work again is to 
render it certain that the standard of value is no longer 
to be kept floating up and down like a cork on the 
waves. The working people, with whom are included 
the farmer, the artisan, and, in fact, all productive la¬ 
borers, are the great creditor classes of the community. They 
are always running up a debt against the rest of us, 
and when they come to be paid, at the end of a week, 
a month, or a year, they ought to be paid in money of full 
value. When they have produced a dollar’s worth of commod¬ 
ity they do not want to be put off with ninety cents, and to se¬ 
cure them the full dollar is not only justice but the best 
means of encouraging an earnest and persistent activi¬ 
ty- 

The Milwaukee Evening Wisconsin, circulating large¬ 
ly among the Western workingmen, says much the 
same thing: 

Some men will contend that an unlimited amount of 
irredeemable currency is the thing that is to produce 
the workingman’s millennium. A currency based upon 
specie, and capable of being converted into specie at 
par at the pleasure of the holder, is the one best calcu¬ 
lated to foster sound and permanent business, because 
specieis the world’s medium of exchange, and good any¬ 
where and at all times, and is not subject to becoming 
redundant, because when there is a tendency that way, 
the pager will be called in or the coin will flow out of 
the country. As the laborer is the most serious suffer¬ 
er from the unsettling of business, it follows that that 
currency is best for him which renders business most 
stable, and that currency is beyond question the one which is 
based on specie. The best friend, therefore, of the labor¬ 
er is he who protests against any measure which is di¬ 
rectly or indirectly putting off the day of return to 
that medium of exchange which is good at home or 
abroad. 


For Value Received. 

On the curbstone a scrubber and scraper, 
Whose money was short in his purse, 
Once promised some dollars on paper, 

For his creditors better than worse. 

But his debtors got hold of his plaster, 
And paid him his promises back, 

So he promised them faster and faster, 

To the creditors hard on his track. 

If a dunce of them turned for a dollar, 

“I promised my promise,” he said, 

‘‘Any gentleman, let alone scholar, 

Must know that the ‘dollar’ is dead.” 

* ‘The promise is really better, 

I take it you see for my tacks. 

If it’s good for myself and my debtors, 
There’s no use of money it lacks.” 

“All right,” said the shaved to the shaver, 
“Your paper’s as good as ’twill buy; 

But will you, good sir, as a favor, 

Just tell me the use of the lie?” 


In speaking, last week, of figures from the North 
American Review, etc., used in support of theories of in¬ 
flation, we did not mean to say they were so used in 
the Review, the contrary being the fact. 


The Financial Record is published by the Finance De¬ 
partment of the American Social Science Association, at 
their offices in New York and Boston. All communications 
respecting it may be addressed to the Secretary of the Asso¬ 
ciation, F. B. Sanborn, No. 5 Pemberton Square, (Room 21; 
Boston; and all exchange papers, public documents, etc., may 
be forwarded to the same address. 























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FINANCIAL RECORD EXTRA. 


CARL SCHURZ. 


His Second Great Speech on the Currency. 


SPOKEN IN THE U. S. SENATE FEB. 24. 1874. 

[Abridged from the official Report.] ' 

I. The Question Stated. 

Mr. President: —It will be observed that the de¬ 
mand made at present by those who desire an expan¬ 
sion of the currency falls far short of what it originally 
was. It may fairly be assumed that, if we adopt the 
present proposition, it will serve merely as an enter¬ 
ing-wedge. I had hoped that from the confused jumble 
of propositions and counter-propositions with which this 
bill had been encumbered, nothing would issue that 
might be seriously detrimental to the best interests of 
the country. That hope has been turned into some¬ 
thing like apprehension, and I feel it my duty now to 
submit some observations to the Senate. 

The Senate has been during these weeks of debate, 
presenting a most extraordinary spectacle. In the sec¬ 
ond half of the nineteenth century, with the uniform 
experience of ages before us, in a period of profound 
peace, with no public dangers pressing upon us the ne¬ 
cessity of exceptional measures, with ample resources 
to defray the expenses of the Government and to de¬ 
velop the resources of the country, the highest legisla¬ 
tive body of this Republic, which is proud of calling 
itself the most progressive state of the world, is seri¬ 
ously debating the question whether new issues of ir¬ 
redeemable paper money shall not be resorted to in 
order to promote the prosperity of the nation; and 
such an almost incredible proposition is supported by 
arguments which will make the civilized world stare if 
they ever become widely known beyond these pre¬ 
cincts. It has actually been asserted in this body that 
the precious metals can no longer remain the standard 
of value in any country . Why"? Because the aggre¬ 
gate quantity and value of the precious metals in exist¬ 
ence do not equal in value the aggregate amount of 
all the products of industry and agriculture; an idea 
just as original and as luminous as it would be to say 
that a yard-stick cannot remain a standard measure of 
length because a yard-stick is not as long as a roll of 
cloth or carpet whose length is to be ascertained, or 
because all the existing yard sticks in the world put to¬ 
gether would not have the same length as all the ob¬ 
jects whose length is to be measured. 

We have been gravely told that conclusive proof of 
the insufficiency of the amount of currency in this 
country is furnished by the fact that England and 
France have a larger volume of currency than we have, 
and that there are many people in the country who 
cannot get all the loans and all the discounts which 
they desire. We have heard it, asserted that an irre¬ 
deemable currency must be a good thing after all, be¬ 
cause there are three countries in Europe—Austria, 
Russia and Italy—whose economic development has 
been somewhat rapid of late, while those countries 
have an irredeemable paper currency. Nobody who 
knows anything about those countries can be ignorant 
of the fact that the sudden development referred to has 
been brought about by great and beneficent changes in 
their political and social organization, setting free and 
putting to work all the productive forces of society, and 
that the leading statesmen of those countries are day 
and night racking their brains to find means by which 
to get rid of that curse of an irredeemable paper 
money which is here represented as the very source of 
prosperity. And I would say to the Senator from In¬ 
diana, (Mr. Morton,) who advanced that proposition 
here, that if we should hold up to those leading states¬ 
men their irredeemable currency as an element of 
progress, they would receive the assertion with a 
melancholy smile of derision. 

We have been assured here that a sufficient issue of 
irredeemable paper money will make money as easy in 
Georgia as it is in England; and that the rates of inter¬ 
est will go down as the quantity of irredeemable cur¬ 
rency increases. It has been asserted, in an endless 
variation of forms, that currency and capital are ma¬ 
terially the same thing. But the very climax is reached 
when we are told that such doctrines, a hundred times 
exploded as hollow fallacies by the experience of cen 
turies, are in reality the most progressive ideas of this 
age; that this is the age of railroads and telegraphs; 
that society is transformed; and that the notion of the 
precious metals remaining the standard of value and a 
medium of exchange is one of those obsolete ideas 
which only old fogies will adhere to. 

II. The Chinese Greenbacks. 

Sir, let us examine a little into the progressive char¬ 
acter of these ideas. Here in my hand I hold an edition 
of Marco Polo’s Travels, showing that this progres¬ 
sive idea prevailed in China many centuries ago; and I 
think it will be instructive to the Senate to learn how 
much of this progress of ideas lies already behind us. 

Marco Po o fells the following story : 

Now that I have told you In detail of the splendor of this city 
of the Emperor’s, I shall proceed to tell you of the mint which 
he hath in the same city, in the which he hath his money corned 
and struck, as I shall relate to you. And in doing so I shall 
make manifest to you how it is that the Great Lord may well 
be able to accomplish even much more than I have told you or 
am going to tell you in this book. For. tell it how I might, you 
never would be satisfied that I was keeping within truth and 
reason! The Emperor’s mint, then,is in this samecity of Cam- 
baluc, and the way it is wrought is such that you might say he 
hath the secret of alchemy in perfection, and you would be 
right! For he makes his money after this fashion : 

He makes them take off the bark of a certain tree, in fact of 
the mulberry tree, the leaves of which are the food of the silk¬ 
worms; these trees being so numerous that whole districts are 
full of them. And this they make into something resembling 
sheet* of paper, but black. When these have been prepared 


they are cut up into pieces of different sizes. The smallest of 
these sizes is worth a half tornesel, the next, a little larger, two 
tornesel; one, a little larger still, is worth half a silver groat of 
Venice: another a whole groat; others yet two groats, five 
groats, and ten groats There is also a kind, worth one bezant 
of gold, and others of three bezants, and so up to ten. All these 
pieces of paper are issued with as much solemnity and authority 
as if they were of pure go'dor silver; and on every piece a variety 
of officials, whose duty it is. have to write their names and to 
put their seals. And when all is prepared duly, the c.iief officer 
deputed by the Kaan smears the seal intrusted to him with Ver¬ 
million, and impresses it on the paper, so that the form of the 
seal remains stamped upon it in red; the money i3 then authen¬ 
tic. Any one forging it would be punished with death. And 
the Kaan causes every year to be made such avast quantity of 
this money, which costs him nothing, tnat it must equal in 
amount all the treasure in the world. With these pieces of pa¬ 
per, made as I have described, he causes all payments on his 
own account to be made; and he makes them to pass current 
universally over all his kingdoms and provinces and territories, 
and whithersoever his power and covereignity extends. And 
nobody, however important he may think himself, dares to re¬ 
fuse them on pain of death. 

So you see they understood then the art of how to 
make paper money a legal-tender! 

And, indeed, everybody takes them readily; for wheresoever 
a person may go throughout the Great Kaan’s dominions he 
shall find these pieces of paper current, and shall be able to 
transact all sales and purchases of goods by means of them just 
as well as if they were coins of pure gold. "Now you have heard 
the ways and means whereby the Great Kaan may have, and 
in fact has, more treasure than all the kings in the world; and 
you know all about it and the reason why. 

Yes, we do know the reason why; and know something 
of it from our own experience. Now,sir,the first issues 
of paper money, as they are traced in the history of 
China, are as old as the beginning of he ninth century 
of this era; something over a thousand years. When 
the system had prevailed a certain period, it was found 
that the paper money became more and more worthless; 
then new issues were made to take up the old ones, 
and one piece of the new issue was exchanged for five 
of the old ones; thus making a settlement on the basis 
of 20 per cent., the people losing 80 per cent. We are 
informed that such proceedings were twice repeated, and 
probably a number of such settlements were made of 
which no knowledge has reached us ; so that while the 
Great Kaan grew rich, the people grew poorer and 
poorer. 

Then under the Minck dynasty the government found 
still another method of more efficiently turning the sys¬ 
tem to the advantage of the ruler; for the government 
paid in paper, but took only its dues in the precious 
metals; and he who would not obey its behests was 
put to death. The paper money depreciated to al¬ 
most nothing; and the whole “progressive” system 
finally broke down. As Marco Polo would say, “You 
know the reason why.” 1 need not go through the 
whole history of paper money in Asia to show that the 
progressive idea of superseding the precious metals 
with paper money, and especially with an irredeemable 
paper money, was discovered and tried there ; and that 
the progressive gentlemen who reiterate the sanm.idea 

as a uen Ji.onvm/ yrugieasiYe as me Lhlncoo 

were over a thousand years ago. 

III. Modern Experiments. 

But, sir, the same progressive idea which was tried 
and exploded here was discovered by the great Scotch 
financier, Law, once more, at the beginning of the eigh¬ 
teenth century, with the same success. Law carried it 
to the full extent of its progressiveness, and had to flee 
for his life after the bubble" had collapsed. Tried and 
exploded again ! Then we had the French assignats. 
The country was made immensely rich; there were 
pieces of paper money enough to cover all the land, and 
to wrap up all the articles bought and sold. Then the 
collapse came ; and at present you find them as wall¬ 
paper covering the cottages of French peasants,to serve 
as warning examples. Tried and exploded once more! 

We had our own continental money, the history of 
which is familiar to you. Tried and exploded again! 

And now, after all these teachings of history, the 
same progressive ideas appear as something new in the 
Senate of the United States. But, sir,when these same 
fallacies, so hoary with age and so overshadowed with 
the condemnation of experience, are still repeated again 
and again in the Senate of the United States, in spite 
of overwhelming refutation on the spot; when they 
still seem to be believed in by some; and when, finally, 
the venerable Senator from Pennsylvania [Mr. Came¬ 
ron] rises and tells us that the very fact of the abund 
ance of money in the great centers at the present mo¬ 
ment is conclusive proof that there is not enough of it 
in the country, and when the same Senator tries to make 
us believe that by voting for inflation we shall, with 
him, make war upon the monopolists and the wicked 
speculators and money-changers, then, sir, I may be 
pardoned if at this late stage of the debate I come for¬ 
ward once more to speak of' first principles. 

IV. Is the Currency Insufficient? 

I desire to show, first, that the gentlemen who favor 
an expansion of the currency labor under an essentially 
erroneous conception of the nature of the difficulties for 
which they want to provide; and, secondly, that the 
remedies which they propose will not effect a cure at 
all, but will rather aggravate the evil. 

The assumption that the volume of our currency 
falls short of the actual requirements of legitimate bus¬ 
iness forms the basis and the only basis of all the ar¬ 
guments that are made here in favor of expansion. Is 
that assumption correct? I deny its correctness. In 
the first speech that I made on this subject, I stated a 
principle which furnishes a test. I said, assuming that 
the people have confidence in the Government issuing 
an irredeemable currency, that currency will not neces¬ 
sarily depreciate or stand at a discount as to gold, as 
long as it simply supersedes and does not exceed in 
volume the gold and silver, and the bank currency 
based upon gold and silver, which formerly sufficed to 
transact the business of that country; but, the condi¬ 


tion of confidence remaining the same,the irredeemable 
currency will depreciate, will be at a discount as to gold, 
as soon as its volume exceeds tnat quantity. When 
such depreciation steadily continues, under the same 
conditions of confidence, it is a sure sign that the 
volume of currency is in excess of the real requirements 
of the legitimate business of the country. I ask the 
question, if our currency were insufficient, would it 
have been possible for the general prices of commodi¬ 
ties to remain so long at the high inflation point at 
which they have stood for years ? If really the 
amount of currency were so insufficient as to impede 
the necessary transactions of the business of the coun¬ 
try, is it not certain that the gold in the country, which 
is now hiding itself, would have been driven out of its 
hiding places to fill the vacuum occasioned by the in¬ 
sufficiency ? 

The proposition has remained absolutely unanswered. 
Indeed, very ingenious efforts have been made to ob¬ 
scure the question. Senators have tried very hard to 
shed a brilliant flood of darkness upon this subject, 
and in a mea sure they have succeeded. We have been 
told that in France and in England the volume of cur¬ 
rency is much larger than here, although neither the 
population nor the extent of the country equals ours. 
That may be true; but I ask what are the circum¬ 
stances determining the volume of currency necessary 
for the real requirements of the business of a country? 

Is it area ? Is it extent of territory ? Is it the num¬ 
ber of square miles ? Why, sir, look at all the new 
territories of the United States, and there is not a man 
in this body who will assert that, large as they are, 
they all together combined would require for their 
business as much currency as the city of Boston. 
Therefore it cannot be area; it cannot be extent of 
territory alone. Is it population ? Look at the whole 
interior of Africa, with its teeming millions of popula¬ 
tion, and I am sure the business of the whole interior 
of Africa does not require half as much currency as 
the single State of Rhode Island. Therefore it cannot 
be population alone. 

I ask, then, is it the amount of productions, the num¬ 
ber of exchanges and of values involved ? But the 
same amount of production, the same number of ex¬ 
changes, the same values involved will require far less 
currency where there are superior facilities of rapid 
communication, of banking and clearing-house sys¬ 
tems, than where they do not exist. Neither of these 
elements alone, therefore, will determine the amount of 
currency which is necessary for the business of a coun¬ 
try, but all of them combined will. Of course I use 
the word “currency” here in the most restricted sense 
of the term, not including deposits, bills and checks, as 
some political economists justly do. 

But I am met with the assertion that in some sections 
of the country a scarcity of money is sometimes actu- 

y*^e , en t sVa^M S 1 s W 

by numerous and impartial market reports that in the 
business centers of the country money is at present in 
abundance, if not in superabundance. There has been 
much excited squirming about this fact on the part of 
the advocates of inflation, and attempts were made to 
deny it, but the evidence was so overwhelming that 
at last gentlemen took refuge in the assumption that 
this abundance of money in the business centers of 
the country was owing to the expansion of the cur¬ 
rency by the drafts that have been made upon the 
$44,000,000 reserve, and that assertion was put for¬ 
ward in a somewhat triumphant manner. A single 
statement will suffice to show its falsity. On the 15th 
of February, 1873, the outstanding greenbacks amount¬ 
ed to S356.000.000, of which the banks in the three 
cities of New York, Boston, and Philadelphia, held 
$63,797,982. On the 16th of February, 1874, the out¬ 
standing greenbacks amounted to $381,327,327, of 
which the same banks in Philadelphia, New York, 
and Boston held $87,228,654. The currency had been 
inflated to the amount of $25,327,327, and three cities 
—New York, Bo-ton, and Philadelphia—had absorbed 
the whole of the increase with the exception of $1,896,- 
645. This shows that the whole increase remained in 
three cities in the East. 

V. The Needs of North Carolina. 

The Senator from North Carolina, [Mr. Merrimon], 
having been quite prominent in this debate, I take his 
State as an illustration. He complains that in North 
Carolina the people are impoverished, that business is 
cramped, that banking capital is scarce, that rates of in¬ 
terest are high, and so on. All this is true. I sincere¬ 
ly sympathize with the Senator and his people, and he 
can scarcely be more anxious to do something to aid 
them than I am. We are entirely agreed as to the ob¬ 
ject; but now let us scrutinize the means. The Sena¬ 
tor wants more paper money for his people, and there¬ 
fore he advocates an expansion of the currency. At 
first he advocated an expansion of the legal-tender cur¬ 
rency, and I admit that would certainly be the most 
efficient means. Now suppose it were made; suppose 
we issue one hundred or two hundred millions of our 
irredeemable legal-tenders, how will it operate ? Gen¬ 
tlemen speak as if the Government of the United States 
issuing an additional amount of paper money were at 
the same time issuing a proclamation to the country 
running somewhat in this way : “All ye who are weary 
and heavily laden, come to me that I may put money 
into your pockets; you, good farmer, have a mortgage 
on your farm and cannot pay it, here are the $2000 you 
want; pay them back when you can. You, enterpris¬ 
ing manufacturer, want to extend your business and 
employ more workmen; you want, say $200,000 or 
$300,000 ; you can have them immediately; here they 
are. You, good merchant, want to carry oh a larger 



















2 


trade and you are cramped by a want of means; there 
is nothing in the world easier than to help you." Gen¬ 
tlemen, this sounds extremely preposterous, and yet I 
assert there have been arguments made in the Senate of 
the United States which would apply only to such a con¬ 
dition of things, and there are thousands and thousands 
of people in the country who have been made to believe 
that an issue of additional currency would workin just 
that way. 

But let us see how it will operate in reality. There 
are only two methods of setting an additional amount of 
currency afloat. One is by defraying the running ex¬ 
penses of the Government. That will not apply here, 
because we can raise revenue enough for that purpose. 
The other is by the purchase of bonds of the United 
States iu the market. That will necessarily have to 
be resorted to. What, then, will the Treasury do ? 
The Treasury goes to buy bonds where bonds are sold; 
that is to say, the Treasury goes to Wall Street. It car¬ 
ries this additional issue of currency there, and there it 
buys its bonds. What is the consequence 1 The addi¬ 
tional amount of currency is thrown at once into the 
very hot-bed of speculation. 

Now, sir, how will North Carolina, how will any other 
Southern State be benefited by an operation like this ? 
North Carolina will not get any share of the additional 
currency for nothing. North Carolina will have to buy 
that additional currency by offering her products in 
the market where that currency is distributed, just as 
North Carolina has to do now. She will have to buy 
that currency, just as she would have to buy that cur¬ 
rency if it were not paper but gold. If these products 
of North Carolina are in demand, they will be bought, 
and currency will go to North Carolina in payment 
thereof,as it does now, and only to that extent: no 
• more. But the additional amount issued by the Gov¬ 
ernment being right in the hot-bed of speculation, and 
having greatly stimulated that speculation, the rule 
governing the diffusion of currency will be just the re 
verse of what it would be under a healthy condition of 
business. Instead of so much currency being used to 
float speculation as can be spared from legitimate busi¬ 
ness, only so much currency will be apt to go into legiti¬ 
mate business as can be spared from floating specula¬ 
tive enterprises. The greater the inflation, therefore, 
the more speculation will control the currency, and the 
less a proportion will be left for legitimate business. 
Far from giving greater facilities to the transactions of 
legitimate business, increased inflation will only tend to 
increase the want far in excess of the supply. Infla¬ 
tion will increase the want, for it will run up the pre¬ 
mium on gold, and have the effect of raising general 
prices, rendering thereby a greater volume of currency 
necessary to effect the same exchanges. Inflation will 
not in proportion increase the supply, for it will drive 

Pnmi el w£ 

mate business. One hundred millions will not help 
you, and if you put out two hundred millions, it will 
help you still less, for the appetite will not be satisfied; 
it will only be stimulated by the supply. 

Now issue more currency, and it will go just as little 
where you want it to go as it does now. You can issue 
it; but, mark my words, you cannot force it into the 
channels of legitimate business, and you cannot force it 
out of the channels of speculation. The currency you 
issue will fall under the control of exactly the same 
class of men who control it now, only in a larger and 
more oppressive form. It will only be a more power¬ 
ful weapon in the hands of the speculator to cripple 
legitimate business and to oppress the people the more 
there is of it. It always has been so, and it always 
will be so ; and the sooner the American people make 
up their minds to this fact and honestly act upon it the 
better it will be for their virtue as well as for their 
prosperity. 

Now, sir, sincerely and profoundly do I sympathize 
with the people of the Senator from North Carolina, 
as I do with the people of all the States who are suffer¬ 
ing ; and I should be most happy to aid them in their 
distress. But, I repeat, I am profoundly convinced 
that inflation will not only not help them, but aggra¬ 
vate the evils of which they are complaining. I would 
not consent to give them poison, even if they would ask 
me for it. 

VI. Capital, Not Currency Needed. 

Senators from the South say their people need more 
currency. No, sir; there is another thing they need. 
There is another and far greater difficulty. They 
need more capital; and they indulge in a most fatal 
delusion if they think that the trick of watering their 
currency can supply them with that capital. There 
are some most obvious causes at the bottom of their 
difficulties. The people of the South have gone through 
a wasteful war, which has consumed and destroyed a 
very large portion of their wealth, and thus their capi¬ 
tal lias dwindled away. The waste has been increased 
in some of the Southern States since the war by very 
bad government: and finally our tariff and the influen- . 
cesofan irredeemable currency have produced upon I 
them the same depressing effect produced by the same 
influences everywhere upon the agricultural interest. 
Thus the people of the South have to make up for a 
very large deficit, and that deficit cannot be covered by 
paper promises to pay. If they want to regain their 
former wealth they must adopt the same methods by 
which wealth is created elsewhere; they must produce 
more, much more than they spend, and they must care¬ 
fully husband and gradually accumulate their surplus 
earnings. They seem to have made themselves believe 
that an inflation of the currency will aid them in getting 
upon their feet again and accelerate their recuperation. | 
But inflation will still more depress the agricultural in- | 


terest, which is the principal source of prosperity in the 
South as well as the West. 

VII. Export and Import Prices. Gambling 
Bisks. 

A considerable portion of some of the most impor¬ 
tant products of agriculture is exported, and the home 
price of the whole crop of those specific articles is regu¬ 
lated by the foreign market. That is a universally 
known and recognized fact. The prices ruling in the 
foreign markets are, first, depressed by the Iree compe¬ 
tition of the whole world ; and, secondly, a specie stand¬ 
ard prevailing there, they are not driven up by the in¬ 
flation that has enhanced the prices of all other articles 
in this country. The farmer or the planter has therefore 
to sell these staple crops at the low prices regulated by 
the foreign market, while for all the necessaries lie has 
to buy he pays the prices grown up to an exorbitant 
hight, far beyond the premium on gold by our home 
inflation. The Senator from Massachusetts on my left, 
[Mr. Boutwell] said that the influence of a depreciat¬ 
ed currency does not raise general prices more than 
the amount of gold premium if the depreciation of the 
currency remains steady at the same point. But the 
difficulty is that the depreciation of the currency does 
not remain steady at the same point. Our experience 
shows us that the premium on gold in this country has 
not remained at the same point for a single week, scarce¬ 
ly for a single day. 

The Senator from Illinois [Mr. Logan] said that he 
thought the same law was governing the price of an 
imported article that was governing the price of an ex¬ 
ported article in the case of a depreciated and fluctuat¬ 
ing currency. Now, sir, I am going to show that the 
same law does not govern these two things. Let us see 
how it works. The importer or the wholesale mer¬ 
chant in New York, when putting up his goods for sale, 
will first add to the gold price the premium on gold. 
That is universally conceded. But he knows that the 
premium on gold or the discount on the currency fluctu¬ 
ates, and that if it be inflated it will certainly depreci¬ 
ate. If he sells on credit, however short that credit, 
may be, he runs this risk : that the sum he receives in 
paper money for liis goods will not represent the same 
gold value which the same sum represented at the time 
when the sale was made; and here an important ele¬ 
ment comes into the calculation of prices, which has 
been left out by all the Senators who, taking the oppo¬ 
site view, have discussed this subject. It is the element 
of risk. The importer, or the manufacturer, or the 
wholesale dealer, must protect himself against the con¬ 
tingency of fluctuation; and thus he puts upon the 
price of his goods a certain percentage to cover that 
contingency. In other words, he makes his customers 
pay for the gambling risk which he himself has to run. 
The jobber who buys from the importer or the manu¬ 
facturer has to put his gambling risk upon the price 
again, for he runs uie same cnance. I'fie ..caiern or 

southern wholesale dealer who buys from the jobber 
has to do the same thing once more, for he again runs 
the same chance. Then the western or southern re¬ 
tailer into whose hands the goods finally pass, has to 
do the same thing again, if he sells on credit, for he 
again runs the same chance. Thus two, three or four 
gambling risks are put upon the price of an article be¬ 
fore the commodity, as it issues from the hands of the 
original seller, passes into the hands of the consumer, 
and thus the rise in the price of commodities goes far 
beyond the premium on gold, especially when the fluc¬ 
tuations of the currency, as inflation will always make 
them, are tending in the way of depreciation. 

Now go to New York and every candid merchant will 
tell you the same story. I know of merchants in New 
York who actually changed the prices of their com¬ 
modities during violent fluctuations of the currency 
six times in one week ; and one told me himself that he 
had done so several times in one day, always lowering 
or raising the gambling risk he had put upon the price 
of his commodities as circumstances changed. And 
experience teaches us that merchants are apt to be 
very quick in putting up prices and very slow in put¬ 
ting them down. 

VIII. Inflation a Curse to Farmers. 

Hence it is clear that while the farmer or planter gets 
for his product only the gold price, with the gold pre¬ 
mium added at the place of sale, he must pay for all he 
has to buy the gold price, with the premium added, 
and an additional amount covering the gambling risks 
of three or four dealers through whose hands the pur¬ 
chased articles pass before they reach him, and that 
additional amount covering the gambling risk will 
naturally grow very much higher when the currency is 
inflated and in process of depreciation. The conclusion 
is inevitable that in this point of view, the correctness 
of which cannot be questioned, an irredeemable fluctu¬ 
ating currency cannot be anything else but a curse to 
the agricultural interest, a curse the more oppressive 
as inflation goes on ; and the more inflation there is the 
more the farmer will lose in buying in proportion to the 
prices at which he has to sell. 

No ; if the farmer or planter wants to prosper he will, 
above all things, use every effort within his power to 
rid the country of a system of currency which obliges 
him to sell at low and to buy at high prices. He may 
for a moment think that inflation will aid him in pay¬ 
ing off his debts, if he has any; but upon considera¬ 
tion he will discover that debts are paid out of surplus 
earnings, and that his earnings will be depressed when 
the price of what he buys is high in proportion to the 
price of what he sells; that his surplus earnings will 
grow larger as soon as the price of what he sells is put 
upon an equal footing with the price of what he buys. 
He will discover that the trick of depreciating the 
legal tender by inflation, in order to pay what he owes 


I 


in a currency less valuable, will not redound to his ad¬ 
vantage in the end, and that in this, as. in all other 
things, honesty is, after all, the best policy. He will 
discover that an honest currency, which permits him 
to buy and sell on the same basis of value, is for him 
the safest basis of prosperity, and I trust the time is 
not far distafit when the farmers, whatever artifices of 
demagogism may be used at present upon them, will, 
as one man, stand up honestly and intelligently for the 
earliest possible return to specie payments. . 

Another scheme by which more currency is to be in¬ 
troduced into the West and South, and a larger amount 
of circulating medium is to be made available for legit¬ 
imate business, is the establishment of a greater num¬ 
ber of national banks of issue. The complaint is. that 
the Eastern States have an undue amount of national- 
bank circulation, and therefore enjoy in a measure a 
monopoly. I admit this to be true. I will not discuss 
here the system of banking in all its aspects, but I will 
inquire how far the establishment of more national 
banks of issue in the West and South will remedy the 
real evil complained of—which evil consists in a lack of 
loanable capital there. If the remedy proposed is to 
serve any good purpose at all, then the establishment 
of new national banks of issue must increase the avail¬ 
able amount of loanable money. It it does not do that, 
it renders scarcely a service w’ortli mentioning. Now, 
will it do that'? The Senator from Indiana, who is 
always ready with his answers, says yes; that it will 
increase the amount of loanable money by the amount 
of bank-currency put out; for he argues, the currency 
issued will be given out in loans and discounts which 
every thirty, sixty, or ninety days will return to the 
banks. The currency will, therefore, stay where it is 
issued, and not flow' East. Is this sound ? I assert 
that it is fallacious in the highest degree. The Senator 
simply forgets to tell us how those new banks are to get 
their issues. 

IX. National Bank Circulation. 

Let us look at the provisions of the national banking 
act. It provides that in order to establish a national 
bank United States bonds must be deposited in the 
Treasury of the United States, and that 90 per cent, of 
the nominal amount of those bonds may be issued by 
the national bank as currency. Now in the first place, 
those who want to establish a national bank will, have 
to deposit the bonds. It is a notorious fact that in the 
West the amount of United States bonds held is rather 
small, and in the South still smaller and the bonds which 
are there are mostly held as fixed investments. The 
persons who want to establish national banks must 
therefore buy their bonds. They must buy them 
where bonds are sold, that is in the Eastern markets; 
and they must buy their bonds with money. Where do 
they get that money 1 They take that money out of 
their home circulation, and the money so taken out of 
their home circulation they carry to New York. 

Now see how tliis operates. For a $1000 bond they 
have to buy they pay, as 5 per cent, bonds now stand, 
about SI 120 in currency. That sum of $1120 is with¬ 
drawn from their home circulation and is added to that 
of New York. Then the}’ take the $1000 bond so pur¬ 
chased to Washington, and for that $1000 bond they 
get $900 in bank currency, and the $900 they carry 
home. Then they lock up 15 or 25 per cent, on the 
$900, as the reserve prescribed by law, in their bank 
vaults, as they may be country or city banks. For the 
$1,120 carried to New York the country bank then 
puts out $865 and the city bank $675 to accommodate 
their customers with loans and discounts. These loans 
and discounts may indeed come back to the bank 
every thirty or sixty or ninety days. But does not 
the Senator from Indiana see, is there anybody so blind 
as not to see, that a much greater amount had gone 
East before the western or southern bank could make 
any loans and discounts to its customers with its 
national bank circulation? Is it not as clear as sun¬ 
light that for every $865 issued by a country bank, 
or every $675 issued by a city bank, $1120 has gone 
to New York before? Is it not clear that the amount 
of loanable money, instead of being increased, has been 
diminished 30 or 40 per cent, by the operation ? It 
is true that by the establishment of national banks 
here and there some greater banking facilities may 
be offered. They take deposits, and they make dis¬ 
counts; but the value of all the facilities thus of¬ 
fered will not make up for the diminution which the 
home circulation, the amount of loanable money has 
actually suffered in that locality by the process. Where, 
then, is the increased accommodation of the business 
public? Nowhere; but the result is just the reverse. 

But, sir, in the establishment of a great many west¬ 
ern and southern banks things have been done which 
show the effect upon the home circulation still more 
clearly. Banks have been established, not upon money 
taken out of their home circulation, but upon credit. 
New York bankers (and I have this from one of them) 
were applied to by’ parties from the West to advance 
the money for purchasing the bonds necessary for the 
establishment of a national bank in the West. The 
New York banker bought the bonds and charged a 
commission and interest. Then he deposited the bonds 
in the Treasury at Washington, and the national bank 
currency was issued thereon. But that currency did 
not go West at all. The New York banker kept it as 
part payment for his advances and commission in pur¬ 
chasing the bonds for the western parties, and the lat¬ 
ter had to cover the balance by drawing what money 
they could from the West. 

But the Senator from Indiana tells us that many ap¬ 
plications are made for permission to establish national 
banks in the West and South. That is probably true. 
W by are they made ? The persons making them know 






























3 


well what they are doing. The bankers themselves 
may do a profitable business, drawing interest on their 
bonds and on the circulation at the same time. But 
the difficulty is that their profits are their own and do 
not benefit the business community ; for the amount of 
loanable money which is to accommodate business men 
and help along enterprise is not only not increased but 
is seriously curtailed by the operation, and the result is 
not that the West or the South gets more, but that the 
East gets more and the West and South less available 
funds after it than they had before. I have made these 
remarks in order to explode that most extraordinary 
notion of the Senator from Indiana, that if we only 
permit the establishment of more national banks in the 
West and South, more currency will go and stay there, 
because the loans and discounts of the banks will return 
every thirty, sixty, or ninety days; and to dispel that 
general and almost incomprehensible delusion, that by 
the establishment of such banks, under such laws as 
we have, the amount of loanable capital in the West or 
South will be increased and not diminished. What¬ 
ever results free banking under the national-bank act 
may have, it will certainly not produce those effects 
which the advocates of free banking in the Senate pre¬ 
tend to be working for. 

X. Free Banking. 

Suppose now that the enactment of such a free-bank¬ 
ing law results in a large increase of national bank cir¬ 
culation, what will be the effect? The Senator from 
Indiana says it will only make things lovely, and not 
disturb values at all. Let us see. What are the 
causes which produce the disturbance of values 
through an irredeemable currency ? There are two. 
First, lack of popular confidence in the issuer of that 
currency ; and, secondly, the relation the quantity of 
the currency bears to the actual requirements of the 
business of the country. The first of these causes, the 
lack of confidence in the issuer, operated during the 
war, while the stability of our Government was still in 
question, and hence the fact that the fluctuations of the 
currency went far beyond the fluctuations that would 
have been caused by the relation of the quantity of the 
currency to the actual requirements of the business oi 
thecountry. That cause, lack of confidence in theis- 
suer, has not operated since the Government showed 
that it could maintain itself, and also demonstrated its 
ability to work in the direction of a redemption of its 
liabilities. But, sir—and I wish the Senate to mark 
this—that cause will commence to operate again as 
soon as the quantity of the currency has increased to 
such an extent as to render the ability or willingness of 
the Government, or of the banks ultimately, to redeem 
their promises in public opinion doubtful. The second 
cause, that is to say, the relation the quantity of cur¬ 
rency bears to the actual requirements of the business 
of thecountry, will operate as soon as the quantity of 
currency in circulation is in excess of the actual .re¬ 
quirements of business, and that effect will grow more 
extensive as the volume of currency is increased. And 
here, it seems to me, it matters very little whether the 
inflation of the currency be that of the legal-tender 
notes or the national-bank notes, only with this differ¬ 
ence, that, as I admit, an inflation of the national bank 
notes will be 25 and 15 per cent, respectively, less 
effective, owing to the amount of greenbacks to be 
locked up as bank reserves; but either kind of infla¬ 
tion, in my opinion, will run up the general prices of 
commodities, of gold among others; will stimulate 
speculation, and speculations will have the same effect 
that it had before. It will draw the currency away 
from the channels of legitimate business and concen¬ 
trate it at the great centers under its own control, thus 
preparing the way for new collapses and disastrous 
crises. These breakdowns will be the more disastrous 
the greater the inflation of the currency has been. 

Now, sir, Ido not wish to be understood as being 
absolutely opposed to free banking under any circum¬ 
stances. 1 should be inclined to vote for it if it be 
coupled with an effectual system of redemption. Of 
course redemption in specie would be the most satis¬ 
factory to me. At present redemption means practi¬ 
cally nothing. It accomplishes only the locking up of a 
certain percentage of the greenbacks for a purpose 
which is only apparent, and which might practically 
be accomplished by locking up the same amount of 
bank-notes. Redeemability, as it now is, might become 
of importance only in the extreme case of violent and 
extensive fluctuations in the market value of our 
bonds, such as might be caused by the very improbable 
contingency of a foreign war and the consequent in¬ 
crease of our national debt. But now, in the ordinary 
run of business, redemption under our present law has 
no restraining influence upon the workings of our cur¬ 
rency, except locking up a certain amount of. green 
backs. A restraining influence, however, might be im¬ 
parted to it even while we are under suspension of 
specie payments, by establishing between the Govern¬ 
ment legal-tender and the national bank note the same 
relation which in suspension times existed in England 
between the Bank of England note and the country 
bank-note there; that is to say, if we give the Govern¬ 
ment legal-tender note a sphere of action superior to 
that of the national-bank note. In that way I think 
free banking might be kept from running into inflation, 
and I should be inclined to vote for it. But without 
such a provision free banking, in my opinion, will re¬ 
sult in inflation ; and I have shown that an inflation of 
virtually irredeemable national-bank currency will, first, 
not remedy the evils which are complained of in the 
West and South, but rather aggravate them ; will not 
give them a larger amount of loanable money, but 
seriously reduce that amount; will not destroy what 
has been called the banking monopoly of Few Eng¬ 


land and New York, but rather confirm and strengthen 
that monopoly; and, secondly, if a free banking act 
such as is proposed, without an effectual system of re¬ 
demption, leads to the establishment of many new 
banks of issue as desired, it will have its effect of inflat¬ 
ing the currency just at the centers of speculation ; all 
the evils of inflation will inevitably follow; that is to 
say, violent fluctuations of values, over-speculation, 
and gambling on a larger scale then ever, until a new 
prash comes, which new crash will be the more disas¬ 
trous the greater the inflation has been. 

XI. Inflation Raises the Rate of Interest. 

I said in my first speech on this subject that the in¬ 
flation of an irredeemable currency will not reduce but 
will raise the current rates of interest; and that pro¬ 
position has been questioned. The Senator from Illinois 
[Mr. Logan] went into a disquisition on the laws of 
demand and supply, and the Senatorfrom Indiana [Mr. 
Morton] disposed of the subject by the somewhat joc¬ 
ular remark that if more money were put into the 
market it would become cheap, just as if more horses 
and hogs were put into the market horses and hogs 
would become cheap. I suggest to the Senator from 
Indiana that the horse and hog argument is not quite 
sufficient in this case. He has only shown in this in¬ 
stance, as in many others, that he does not appreciate 
the difference between capital and currency, especially 
between capital and an irredeemable paper currency. 
I shall try to make myself clear. 

Why will the inflation of an irredeemable paper cur¬ 
rency not lower but raise the rates of interest? In the 
first place, in depreciating the currency, it will make 
a larger amount of currency necessary to perform the 
same transactions in business, and the aggregate 
amount of interest which you would have to pay for 
the sum you want for the same transactions would 
necessarily be larger. That, I think, is obvious. In 
the second place, when the currency is inflated it incites 
speculation and gambling. This fact is so notorious 
that nobody questions it. Speculation and gambling, 
dealing in large ventures and working for very large 
profits, induce, and in most cases force, those engaged 
in them to pay high rates of interest in order to obtain 
the money with which to float their speculative enter¬ 
prises from which they expect such large profits. As 
soon as speculation rules the money market, the rates 
of interest will therefore necessarily rise, and legitimate 
business, from which money is diverted by speculation, 
must conform itself to those high rates in order to ob¬ 
tain the money which it needs; and hence a general 
rise of rates. 

But still another element comes in here to produce 
the same effect, and that is the element of risk. When 
an irredeemable currency's inflated, it depreciates in 
value. The capitalist who lends out money must take 
that contingency into consideration. He has to run 
what I have already called the gambling risk. He will 
prefer to lend it out on call, in the first place, so as to 
be able to put his hand upon it as soon as the chances 
so turn that he may lose by leav.ng it out longer where 
he has put it; but even then he will want to cover his 
risk, and he will do that by demanding a higher rate of 
interest, sufficient to cover that risk. Hence it is that 
loans on call are preferred, and a higher rate of interest 
is demanded by lenders to cover the gambling risk, 
under the influence exercised by an irredeemable cur¬ 
rency, which, by its fluctuations, render the value of 
the money invested in a loan insecure. 

The fact that at the present moment loans are com¬ 
paratively easy in the money market has been referred 
to as contradicting this view. It does not contradict it at 
all. The crisis has crippled enterprise generally, and 
specially speculative enterprise. Speculation has had no 
time yet to recover and to produce its effects. Money 
is plenty in proportion to the present limited require¬ 
ment of business,and although we have had an addition 
to the currency of twenty-five or twenty-six million 
dollars, yet much of the money that makes up that 
addition, and more besides, is at the present moment 
lying idle. The addition has not exercised its in¬ 
fluence yet, but it will without doubt exercise that in¬ 
fluence and produce its effects soon. Speculation is 
already reviving; we observe it in the very western 
markets in the grain trade. It is reviving in New 
York, as everybody sees. It is reviving rapidly. If 
we inflate the currency we shall have much more spec¬ 
ulation than we had before; and with it, and with a 
further depreciation of our paper money, all the effects 
upon the rate of interest which I hare stated will 
rapidly appear with all their oppressive consequences; 
and then those who clamor for inflation in order to give 
cheap money at low rates of interest to the people of 
the West and South will learn to their sorrow that an 
irredeemable currency is indeed not the people’s money 
but the speculator’s money, and that by extending and 
strengthening that pernicious system they have brought 
a curse and not a blessing upon those whose interests 
they pretend to serve. 

XII. European Investments in America. 

A few days ago I received from a friend in Europe a 
most significant letter, to which an answer was request¬ 
ed. The writer is a merchant who desires to retire 
from business. He writes me to this effect: “lean 
realize out of my business several hundred thousand 
dollars, and should like to invest my money at a good 
rate of interest. I have thought of investing it in the 
United States on mortgage security, which, as I am 
informed, bears from 8 to 10 per cent.; but I learned 
also that you are likely to inflate the currency in the 
United States, which, of course, will result in deprecia¬ 
tion. I would now ask whether it would be safe for 
me to make such an investment in mortgage loans in 
the United States while there is a chance that your 


legal-tender money may depreciate so that I would 
lose more by the depreciation of capital invested than 
I would gain by the interest 1 might get.” 

I ask the Senator from Indiana what answer would 
he give, at this moment, to that gentleman who wants 
to send several hundred thousand dollars to the United 
States in order to invest them here ? 

He will probably give the same answer that the Sen¬ 
ator from Illinois, [Mr. Logan], has just given in an 
undertone, “Write him to send it on.” Let me tell 
Senators that we cannot very well expect foreigners to 
send along their money when the chances are that they 
will suffer loss in consequence of our own financial pol¬ 
icy. Senators, ought not to conceal from themselves 
that the credit of this country has most seriously suf¬ 
fered by the sale of stocks in Europe which have turned 
out to be worth far less than they were represented to 
be. I consider it my first duty as a citizen ot the Uni¬ 
ted States, as an American, to deal fairly and honestly 
with the foreigner as well as with the countryman ; and 
as an American who has the honor of the country at 
heart I cannot afford to induce a foreigner to invest 
money in a venture concerning which 1 have such good 
reason to fear that it will be a losing business. I shall 
tell that gentleman, “Send your money here, and tell 
all your friends to send theirs as soon as we enter upon 
a policy that will be directed towards specie pay¬ 
ments,’’ for then I shall know that the value of the cap¬ 
ital so invested will be safe ; but I should not consider 
it honest advice, did I tell him to convert his gold into 
our paper money, as long as there is danger that the 
paper money might be depreciated by inflation. 

Mr. Cameron. Does the Senator believe he would 
be swindling his German friends by advising them to 
send their money here and invest it in mortgages upon 
good lands, and good houses, and good buildings here ? 
Does he believe that all the people of this country are 
scoundrels, and that they want to get the money of Eu¬ 
rope here upon dishonest and fraudulent representations? 

Mr. Schcrz. No, sir. 

Mr. Cameron. Does he not know that there is no 
part of the world in which money upon first mortgage 
upon real estate is so safe, so secure, as it is in the Uni¬ 
ted States, and in every part of the United States ? 

Mr. Schcrz. Yes, sir; I know all that. I know 
that for myself I would ask for no better security than 
a mortgage on real estate in the United States; but I 
know also, as every other Senator knows, that if I had 
to invest $100,000 to-day, with the prospect of an infla¬ 
tion of our currency, that $100,000 to be paid back to 
me in two or three years, when the premium on gold 
may not be 10 per cent but 50 per cent, 1 would be like¬ 
ly to lose nearly one-half of my capital, however good 
the security might have been on which that capital was 
invested. 

I would never hesitate to tell Europeans, “Send as 
much money as you can raise to aid us in developing 
our resources and to profit by it yourselves,” as soon as 
our monetary system is such as to give them reasona¬ 
ble security that when the loans fall due they will get 
the same value back which they invested. Now let me 
tell the Senator from Pennsylvania I was in Europe 
last year, and the people there have begun to under¬ 
stand this thing as well as we do. Wo must not indulge 
in the delusion that foreign capitalists will be eager to 
run the risks which a fluctuating currency imposes upon 
them ; and nothing is more natural than that, while we 
have that currency, many investments of European 
money are withheld which otherwise we might expect. 
In this respect the character of our currency must nec¬ 
essarily inflict a very serious injury upon us. 

Here is a man who asks me, “Can I, at the present 
moment, send over several hundred thousand dollars 
to be invested in mortgage securities in the United 
States, with safety as to the value of my capital, while 
you have a fluctuating, irredeemable paper money ?” 
That gentleman wants to profit by the rates of interest 
here prevailing; but above all things he wants to have 
the value of his capital secured. He will not distrust 
the mortgage, but he wants to know whether, when the 
debt falls due, the same number of paper dollars re¬ 
turned to him will be worth in gold as much as they 
were when he made the loan or mortgage. 

Mr. Cameron. The increase of real estate is always 
equal to any depreciation of the currency. 

Mr. Schcrz. But, sir, the increase of real estate in 
value does not increase the amount of the mortgage as 
the Senator knows, just as well as every child in the 
country knows. And, therefore, 1 say so long as the 
foreign investor cannot be sure that he will have re¬ 
turned to him the same amount of capital lie will not 
invest; it is useless for gentlemen to close their eyes to 
the fact. It is one of the results springing from our 
irredeemable paper money. It is so, and it cannot be 
otherwise. If the Senator is answered, and I think he is. 

Mr. Cameron. The Senator has not answered my 
question at all. The special proposition was that these 
people expected to put their money in mortgages on real 
estate. I say that no one who has ever invested upon 
a first mortgage on property at current rates in this 
country has ever lost by the investment. 

Mr. Schcrz. The "Senator cannot have so com¬ 
pletely misunderstood me as to think that I expressed 
the least doubt of the safety of mortgages in the United 
States. If I were worth $10,000,000 and had it all to 
invest in loans, I would ask for no better security than 
mortgages on real estate in the United States. The 
question is this : whether a man investing a certain sum 
in mortgages, when he retires his capital two or three 
years hence, will not by the depreciation of the curren¬ 
cy lose 20 or 30 or 40 per cent of the value of his capi¬ 
tal; whether the dollar that he invests now will be 
worth just as much when that dollar will be returned to 











4 


him ? The Senator from Pennsylvania certainly knows 
that when an irredeemable currency is inflated, the ef- 
lect will be its depreciation ; that when he to-day can 
buy a dollar in gold for §1.12 in currency, if we expand 
the currency at the rate of §100,000,000 or §200,000,000 
more he will have to pay $1.25 or $1.30 in currency for 
a dollar in gold; in other words, while a dollar in cur¬ 
rency may be worth eighty-eight cents in gold, if we in¬ 
flate the currency it may be worth then seventy-five or 
seventy or sixty cents; and, old and successful finan¬ 
cier as the Senator is, he is too world-wise not to under¬ 
stand that when I invest eighty cents and get only six¬ 
ty cents back, I shall be a loser by twenty cents. 

XLII. American Credit. 

There are persons, I fear, who are depreciating the 
credit of the country. They are those who want to con¬ 
tinue a money system which introduces into all trans¬ 
actions of business the element of chance and decep¬ 
tion; a money system which by that deception injures 
not only the foreigner who may invest his funds here, 
but our own people; a system of irredeemable paper 
money which has time and again fallen under the con¬ 
tempt of civilized mankind. Those, I say, are depre¬ 
ciating the credit of the country who in the very midst 
of the nineteenth century, with all the lights of universal 
experience around them, still strive to maintain, to con¬ 
firm, and to perpetuate a disgrace like that. I tell the 
Senator from Pennsylvania I can think of nothing that 
would be better calculated to elevate the American 
character and to raise the credit of the country in the 
eyes of the world than a speedy deliverance from that 
system. Why is it, I would ask, that these national 
bonds of ours, than which there is no better security in 
the world, do not rise higher than they have done ? 
Why is it that they do not keep pace, in proportion 
to the respective rates of interest with the best European 
securities ? Simply because so long as we have this false 
system of irredeemable money, there is still lurking in 
the minds of men a secret suspicion that, by some trick or 
other, the national debt may still be paid off with de¬ 
preciated greenbacks; and when I say that, I know 
whereof I speak, for I heard it a hundred times, to my 
own shame and to that of my country. I know that sus¬ 
picion is wrong, absolutely groundless ; but I consider 
it my duty as a candid man, to tell you that such a sus¬ 
picion exists. I have now indicated how the credit of 
the country can be raised and how it is depreciated. 

But there was one remark which fell from the Sena¬ 
tor from Pennsylvania which really surprised me. He 
said that the people of Europe took hold of only such 
loans as were made in their immediate neighborhood. 
Has he forgotten that during our war hundreds of mill¬ 
ions of our bonds went into Germany, and were readily 
taken there, while the destinies of the United States were 
still trembling in the scale of battle ? Has he forgotten 
that ? Does he not know that the European countries 
have been fairly flooded with our railroad securities ? 
Can he count the millions of capital that came from 
Europe with which so many of our enterprises were 
floated, that could not find ready and sufficient capital 
at home ? 

Mr. Sherman. I wish to recall to my friend’s mind, 
a fact that is known to me, and no doubt known to 
him, that on account of the uncertainty of the value of 
our paper money, its constant appreciation and depre¬ 
ciation, nine-tenths, perhaps ninety-nine one-hun¬ 
dredths, of all the loans now made in Europe to this 
country, both principal and interest, are required to be 
paid in gold. 

Mr. Schcrz. Itisafactas notorious as sunlight; 
and therefore I express my surprise that so old a finan¬ 
cier as the Senator from Pennsylvania, should question 
it in the least. 

XIV. Interest in the West. 

The other day I received a letter from Omaha, 
in Nebraska, complaining very much that interest 
ranges there at 12 to 24 per cent, while in Boston and 
New York at, as the letter stated, it ranged only from 6 to 
8. This is undoubtedly true. In New York and Boston 
we can hear exactly the same complaint, that interest 
ranges there from 6 to 8 per cent, while in London and 
Amsterdam it ranges from two to three; and the reason 
of the difference between Omaha and Boston, and be¬ 
tween Boston and Amsterdam, is exactly the same. 
In London and Amsterdam there are large accumula¬ 
tions of loanable capital; centuries have been spent in 
piling it up; larger accumulations of loanable capital, 
than in New York and Boston. And in New York and 
Boston there are larger accumulations of loanable capital 
also the growth of centuries, than in Omaha and Nebras¬ 
ka, or in Hannibal in Missouri. Now, if we could trans¬ 
port the accumulation of wealth existing in Amsterdam 
and London bodily to New York and Boston, then the 
rate of interest in the latter places would not be aDy long¬ 
er 6 and 8 per cent, but it would be 2 to 3 per cent; and 
if we could transport all the accumulated wealth of 
New York and Boston to Omaha and Hannibal, then, 
in all probability, the rate of interest there would cease 
to be 12 to 24 per cent, and it would range at 6 to 8. 
But the same effect cannot be produced any other way 
than by the gradual creation aud accumulation of 
wealth. The accumulation of capital and consequent 
low rates of interest are the result of the work of gen¬ 
erations. It cannot be created by the establishment of 
banks, or by the issue of paper money; and the idea 
that it can be done by the printing of irredeemable 
paper money is so absurd that every baby can see it. 
Still more preposterous is the fabulous notion that we 
can issue paper money enough to secure to every body 
who wants it a loan, or to discount every man’s note 
at as low a rate of interest as he desires. It is indeed 
incredible that such propositions should be seriously 


advanced and advocated on the floor of the Senate of 
the United States. Why, we might as well in the short¬ 
est way solve the problem by saying: Let every man 
issue his note for all his debts, past, present, and pro¬ 
spective ; and then let us enact a law making that note 
legal tender. 

XV. Theory and Fact. 

And now, sir, when I have demonstrated by fact and 
reason, so that every child might understand them, 
propositions like these, that capital and currency are 
two very different things : that the wealth of a country 
is not augmented by printing more paper money; that 
when popular confidence in the issue of irredeemable 
paper money is unimpaired the constant depreciation of 
that paper money demonstrates its excess in quantity 
over and above the real requirements of legitimate 
business ; that such a currency m ay in the aggregate be 
superabundant and yet an insufficiency may be felt in 
certain localities and certain branches of business in 
consequence of a vicious diffusion; that this vicious 
diffusion, springing in part from the natural effects of 
an irredeemable and redundant currency, cannot be 
cured but will only be aggravated by inflation; that the 
gambling risk inseparable from an irredeemable and 
fluctuating currency will drive up prices as well as the 
rates of interest; that the rate of interest depends on 
the existing amount of real capital in a loanable form 
and its proportion to the demand for the use of that 
capital, and can therefore not be lowered by an infla¬ 
tion of an irredeemable currency, but will be raised 
by the increased element of risk ; that for such reasons 
the remedies for existing evils proposed by gentlemen 
who favor inflation are not only no real remedies at all, 
but mere quack medicines, which wiil only aggravate 
the element; wl\en all this is demonstrated, gentlemen, 
on the opposite Bide mount the high horse and say : 
“Why all this is mere theory; you are mere abstrac¬ 
tionists. We are practical men, which you are not; 
you look into books, but we look into the living active 
business of the country ; we trust the evidence of our 
senses ; we open our eyes, and see what is going on, 
and from what we see we draw our conclusions, and 
upon what we see we build our theories as to reme¬ 
dies.” Away, then, with all those great thinkers 
upon whom the world has so long looked with pride ; 
away with Adam Smith and John Stuart Mill and 
Ricardo and Bonamy Price. Away also with our own 
Thomas Jefferson and Hamilton and Gallatin and 
Crawford. 

We have now among us a new school of political 
economists who know better. With the Senator from 
Indiana, they exclaim: “Throw theory to the dogs,” 
as he said the other day; and it must be admitted 
they have thrown theory to the dogs most effectually. 
They rely upon nothing but the evidence of their 
senses, and how can that lead them astray ? But I 
suspect there is after all something in the principles of 
political economy, in that science of finance, which is 
the accumulated wisdom and experience of many cen¬ 
turies, although the practical statesmen of the old 
Tatum school cannot see it and are ready to throw it 
to the dogs. Throw it to the dogs, Senators, and I 
fear, the honor as well as the prosperity of the country 
will soon go the same way. 

XVI. Inflation a Curse to the Poor. 

When all other resources fail, when even a contemptu¬ 
ous sneer at book-learning and theory will no longer 
avail, the advocates of inflation grow fearfully pathet 
ic in calling the opponents of their fallacious doctrines 
enemies of the poor, supporters of the rich, friends of 
the oppressors, of the money-changer, of the wicked 
speculator, and so on. Is, then, the inflation of irre¬ 
deemable paper money really a help to the poor ? Can 
it be ? Can any sensible man pretend for a moment 
that it can be ? It has been well said here that the 
rich man is always able to take care of his interests ; 
and so he is. He can provide for his own welfare, 
whatever the vicissitudes of trade and the fluctuations 
of values may be, for he has the means to take advan¬ 
tage of every change. Is the currency inflated and 
does it depreciate? He speculates upon a rise of 
prices. Is the movement in the opposite direction? 
He speculates upon their fall. He stands upon that 
eminence where he can see the storm coming and dis¬ 
cern in what direction it will blow. He can bend be¬ 
fore it and rise up when it is over. He can watch his 
chances, and he has the means to turn them to his ad¬ 
vantage. He commands the situation, and can take 
care not to become its victim ; and he covers his risks 
by making the poor man pay their cost; for the poor 
man, living from hand to mouth on his daily earnings, 
is the slave of his necessities. The vicissitudes of the 
great business world overtake him unawares, for he 
has not the opportunity to watch the workings of hid¬ 
den forces ; and even if he had that opportunity, what 
means would he have to avail himself of this knowl¬ 
edge ? What means to provide for the changes of 
fortune? He cannot, amid the fluctuations of values, 
speculate on a rise or on a fall; what lie receives 
for his labor he has to use at once just as he receives 
it, for bread to feed his family, or for clothing to cover 
them; or if he saves anything, his savings mav depre¬ 
ciate in his own hand while that holds them, small as 
they are: and what means has he to make up for the 
loss? His savings are too small for speculative opera¬ 
tions. The great steamer of five thousand tons may 
defy the storm and break her course through the an¬ 
griest sea with scarcely impeded strength, but the 
poor fisherman’s boat is helpless against the gale, and 
without resistance dashed upon the rocks by overpow¬ 
ering waves. The poor man is the helpless victim, and 
nothing but the victim, of that tricky game which a 


fluctuating paper money enables the rich to play with 
the poor man’s fortunes. 

You speak of the distress of those who this day are 
without work and without bread. What has caused 
that distress ? It was caused by a crisis, a collapse of 
speculation, grown up under the auspices of that same 
paper-money system which you now strive to confirm 
and strengthen in all its iniquitous influences to bring 
on other crashes and collapses; and who will be the 
man to be ground to powder by them ? The poor 
man, not the rich. What is it that rises last when 
your paper system drives up prices ? The laboring 
man’s wages. What is it that drops first when your 
bubbles of paper speculation burst? The poor man’s 
earnings. You speak of reviving confidence, and, 
with confidence, enterprise, by new issues of paper 
money, and yet that very confidence has been de¬ 
stroyed by the very agency of that paper money; and 
confidence does not revive to-day for lear of new fluc¬ 
tuations and new uncertainties. You talk of debtors 
and creditors, debtors being benefited by inflation, 
and creditors by the resumption of specie payments. 
Let me ask you, who are the debtors, and who are the 
creditors of this country ? Look at the savings banks 
of this country, and what do you 6ee there? Seven 
hundred and sixty million dollars of deposits. Who 
are the depositors ? Not the rich, but the poor man, 
who earns his bread by the sweat of his brow ; the 
man of small means, who puts there for safe keeping 
his small surplus earnings. The same class have in 
national and State banks, and in trust companies, as 
has been estimated by good authority, two hundred 
millions more ; and another two hundred and fifty mil¬ 
lions are owing to the same class in the shape of un¬ 
paid wages and other debts. There are twelve hundred 
millions, then—twelve hundred millions of debt—owing 
to the laboring men and the men of small means. 
And now, I ask you who are advocating the inflation 
of the currency, what are you doing to those poor peo¬ 
ple ; what are you doing with their twelve hundred 
millions of money ? Inflate the currency, and by in¬ 
flation depreciate it, and you will diminish the value 
of these twelve hundred millions 10, 20, 30 per cent. 
And now boast of being the friends of the poor while 
you advocate a policy that will rob the poor of the 
land of so large a proportion of their hard-earned 
property! 

XVII. Repudiation and Inflation. 

I have seen and heard this kind of thing before. 
About seven or eight years ago some politicians thought 
it would be a very popular idea to repudiate our duty, 
to pay the national bonds in gold; they proposed to 
issue the necessary amount of greenbacks to pay 
off the national debt in a depreciated paper, in the 
cheapest possible money. They thought the people 
would jump at the chance of thus getting rid of a very 
onerous burden. Well, sir, what was the result? At 
first the proposition seemed to become quite popular in 
some quarters, and politicians of both parties—who are 
always ready to run after a popular cry, right or wrong, 
and always think what they think the people think- 
saw there a chance of a profitable game for themselves. 
They advocated the scheme, or at least did nothing 
against it. They thought they could not afford to op¬ 
pose it. Well, sir, here is a piece of my personal ex¬ 
perience. In the presidential campaign of 1868 I was 
invited to make speeches in the State of Indiana. 
When I came into that State I was met by some poli¬ 
ticians who told me, “O, now we want you not to say 
anything in your speeches against that greenback 
scheme; the people of Indiana are almost universally 
in favor of it; they want to get rid ofthik heavy debt; 
they do not want to pay the bloated bondholder in 
gold;” and so on. I replied: “It I cannot say about 
the greenback scheme what I please in this canvass, I 
will not speak in Indiana at all.” After some hesita¬ 
tion those politicians consented that I should proceed ; 
but they watched me with great trepidation. Well, I 
did speak my mind, and in every speech I denounced 
the greenback scheme as a most rascally conception, 
and I insisted that it was the sacred duty of the Govern¬ 
ment to pay to the national creditor every farthing ac¬ 
cording to the letter and spirit of the law. And there 
were the people of Indiana before me, who had been 
represented to me as being fairly wild on the subject of 
the greenback scheme. What was the result? No 
declaration in my speeches was more heartily applauded 
than just this, and that applause came from the same 
; people whose weak-kneed politicians had represented 
to me as all on fire for repudiation. Ah, sir, those mis¬ 
calculate their chances who think they can safely spec- 
j ulate upon the rascally instincts of the American people. 

The inflation cry will go the same way the repudia- 
; tion cry has gone. I am convinced the inflation cry 
will be one of the most short-lived cries this country 
ever heard ; and I am not much mistaken when I say 
| that those who advocate inflation in this body must 
make hot haste to commit the Senate to that iniquitous 
doctrine, or the last semblance of popular support will 
drop away before the decision is reached. No, sir- 
it is not the people, it is the speculators and their de¬ 
luded victims, who are continually dinning the cry of 
inflation into our ears, and so it will become manifest 
to every one who has eyes to see and ears to hear. 


The Financial Record is published by the Finance De¬ 
partment of the American Social Science Association, at 
their office* in New York and Boston. All communication! 
respecting it may be addressed to the Secretary of the Asso¬ 
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be forwarded to the same address. 
















FINANCIAL RECORD EXTRA. NO. 2. 

“WE NEED ONE THING BESIDES MORE MONEY, AND THAT IS BETTER MONEY ."—Senator Each. Chandler. 


VOL. I. 


WEDNESDAY, MAY 6, 1874. 


VETO EXTEA. 


The Financial Record will ba continued until further no¬ 
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invited to send their pipers in exchange. It, will he no longer 
pnblisU-d by the America* Social Science Association, 
but far the present, as heretofore, communications respecting it 
may oa at ires ed to the S *cretary of t he Asmciatio i, F. B. San- 
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same address. 


The Vetoed Currency Hill. 

THE LAST WORDS AGAINST IT. 

I. IN THE SENATE. 

Oa Mon lay the 6th of April, when the Inflation Bill 
passed tile Senate, some remarkable speeches were 
made against it, of which we spoke at the time, by 
Messrs. Schurz, Conkling, Bayard, Anthony, Thurman 
and others. Tins important debate we now reprint 
from the Congressional Record, and along with it the 
veto message of President Grant. Wuenthe bill was 
about to be voted upon in the Senate, Carl Schurz, 
desiring to put the folly and inconsistency of the infla- | 
tionists iu a strong light made this humorous proposi¬ 
tion : 

THE BILL REDUCED TO ITS ABSURDITY. 

Mr Schurz. Unless some one else desires to 
amend this bid I shall offer a last amendment. It 
seems we have now arrived at the end of the de¬ 
bate; but I would suggest to Senators of the majori¬ 
ty that tliis bill is incomplete; it is by no means cer¬ 
tain to accomplish the objects which they desire to 
reach. Ttiey will remember toat at the beginning of 
this debate we had s >me discussion as to the manner 
in wme i cue $18,003 003 should be set afloat so as to 
be sure to flow into tiie business channels of the coun¬ 
try. Tue Senator trom Michigan this afternoon said 
tnat the 326.000,033 already put into circulation has 
reached those business channels, on which I am sorry j 
to disagree with him. Those 326,030,0)0 are now in 
the vauus of the banks of New. York, Boston and Phil¬ 
adelphia. Now, you undoubtedly want this additional 
issue to go “where it will do the most good.” You do 
not desire it to stay in the eastern banks ; you do not 
want it to become mere food for the gamblers; you 
want it to accomplish something good; you want it 
especially to go to the West and South; and yet no 
way lias been suggested in which the Secretary of the 
Treasury is so to issue this additional currency as to 
make sure the desired object. In order to cover this 
obvious and fatal deficiency, I shall now suggest an 
amendment to he attached to the last section of the 
bill. It is as follows : 

And th 3 Secretary of the Treasury is hereby directed, in put¬ 
ting into circulation the full maximum amount of $403,0)1,000 
of United states notes, t»tilte »uch measures as will not fail to 
prevent any additional is-ues of -uch note-* from falling into 
the hands of the speculators and stocs-garnblers of 'lie conn- | 
try, and also from remaining in the Eastern at it s, [laughter;] 
but h- will cause such additioua issues of lega : -tender currency 
to be fairly and impartially distributed among i lie people of 
the vVe-t and south; and then, when any community in ilie 
West and South desires to establish a national bank, the Sec¬ 
retary of the Treasury will furnish them an ample supply of 
United Stales bonds, on which they may obtain the proper 
proportions of national-ban- currency. 

And the Secretary of the Trea-ury is further directed to see 
to it that tne curreucy be not depreciated by expansion, but 
that it be ela-tic in volume au 1 strictly stable m value, [1 lugh- 
ter;] or if that cannot be accomplished, he will so judiciously 
arrange the depreciation of the currency that th • debtors of the 
country be redeved of as larsre as possible a part of their bur¬ 
dens, while the creditors shall not suffer any loss, [laughter;] 
but th- Secretary will take care that am mg the debtors so ben¬ 
efited shall not be those who, by overtn.di-g or reckless -pecu¬ 
lation or gambling, involved themselves in heavy liabilities, 
and who now desire to pay a less value than they owe. 

Tne Secretary of the Treasury will take especial care that the 
laboring men and the men of small means, to whom the trust 
companies, savings-banks, national and State bank-, and em¬ 
ployers owe over *1,(100,1100,u0o iu deposits and unpaid wages, 
do not suffer auv loss iu the value of such debts due them, and 
that the t wo hundred and fifty thousand maimed soldiers and 
soldiers’ widows and orphans, who receive i3),OOD.OOO of pen¬ 
sions annually, be not robbed of any part of the value of such 
pensions through such depreciation of the currency. 

And the Secretary of the Treasury is further directed to in¬ 
quire on the first day of each raontii whether there is au equal 
distribut on per capita of the currency, as between England 
and France and the United States, and al-o in the different , 
States and Territories of this Union, [laughter,] and whether j 
every citizen of the United States can get nis note discounted 
at a conveniently low rate of interest; and if he finds that 
such is not the case, the Secretary of the Treasury is hereby au¬ 
thorized to make further additions to the currency, until the 
circulation per capita, as above, is fairly equalized, and until 
every citizen of the United States can get his notes discounted 
at such rates of interest as he desires. [Laughter.] 

And the Secretary of the Treasury will steadily continue such 
additions to the currency until every citizen of the United 
States has enough, and until the country is entirely relieved of j 
its present public debt, and of any further necessity of borrow- j 
ing money abroad for the construction of railroads and other i 
public improvements, Llaughter,] so that all the interest now , 
paid on such debts may be kept at home; and when this is ac- ! 


complished, the Secretary of e Treasury shall forthwith re¬ 
sume spec>e payments without any shuck to the bu.-ineas of the 
country. [Laughter.] 

Now l am sure that this embodies all the objects 
which the majority design to reach. I know it is not 
exactly a legislative shape, but I throw it out as a sug 
gestion to the majority, who may put it in better form. 

This amendment was ruled out of order, of course, 
and the main question was about to be put, when the 
serious warning against tiie bill began. Mr. Saulsbury 
of-Delaware led off. 

THE VOICE OF DELAWARE. 

Mr. Saulsbury. Mr. President. 1 bad hoped when 
the discussion ot this question first commenced that we 
would do something <.o meet the expectations of the 
country ; that ive would adopt some measure to place 
the financial condition of this cjuntry where the people 
might repose upon the idea that we would at some time 
arrive at specie payments. But, sir, any hope that was 
indulged upon that point I think has now disappeared. 
We have adopted in Committee of the Whole, and are 
about to pass in the Senate, a measure which increases 
the irredeemable circulation of this country 390,000,000, 
and without a single provision connected with it or an¬ 
nexed to it that looks to the redemption of that circula¬ 
tion at any time in the future. Every proposition which 
has been made by gentlemen desiring to perfect that 
bill, and to let the public have an idea that we would 
at some day return to specie payments, has been voted 
down by the friends of this inflation of the currency. 
Indeed there has been rebuke alter rebuke administered 
to gentlemen who have sought to put the bill in such a 
shape, and the friends of inflation on this floor have 
claimed the exclusive right of perfecting the bill, and 
yet there is not a single provision connected with the 
hill to day that looks to the redemption of the circula¬ 
tion which they are about to increase at any time in the 
future. If there is, such a provision has escaped my 
attention. To day, when a proposition was made tore- 
strict this matter, providing that the public debt should 
not be increased by reason of the legislation now about 
to be had, that was voted down. 

The Senator from Michigan, [Mr. Ferry], a few 
days ago very triumphantly said that the friends of this 
measuie would take the responsibility of it. Sir, I 
want them to take the whole responsibility. When 
the cereals of the farming and agricultural interests of 
the West are being paid for in depreciated paper mon¬ 
ey I want him to meet the constituency of the West and 
take the full measure of the responsibility which he so 
valiantly assumes on this floor. I want my friend 
from Indiana, [Mr. Morton], the leader of this measure, 
who has marshaled his political friends so sucessfully 
in advocacy of it, to meet also the responsibility. I 
congratulate him that he had not only been able on this 
occasion to call around him his own Republican friends, 
but he has invaded our ranks, and, I am sorry to say, 
has gathered recruits from the democracy. But while 
I congratulate him for his skill in marshaling the hosts 
of the inflationists on this occasion, I point him to the 
day of reckoning when the people of this country will 
demand to know why the paper currency of this coun¬ 
try was inflated when it was already accumulated in the 
eastern banks I want my friend from North Carolina, 
[Mr. Mkrrimon], who has so effectually assisted in this 
measure, which I believe to be ruinous to the best inter¬ 
ests of the country, to take his full share of the responsi 
bility which I know the people of this country will hold 
the inflations in the Senate to for their action in this 
matter. I want the gentlemen who have expressed 
their willingness to take the responsibility in this mat¬ 
ter to take it. For one I wash my hands of it. I will 
vote against the measure I would vote against it ev¬ 
ery day in the year to the latest day that I have a seat 
in this body. 

I did not intend that this measure should pass with 
out at least expressing my objections to it in every pos 
sible shape, even to the last stage in which it shall be 
before the Senate. 

THE VOICE OF NEW YORK. 

Mr. Conkling. Mr. President, when the present 
session of Congress opened, the country had been visit¬ 
ed with severe financial disaster. The causes of the 
panic, so called, are known to all observing and re¬ 
flecting men, and there can, I think, be little doubt what 
its causes were. It did not happen because there was 
not currency enough to transact all the actual business 
of the country. On the contrary, with gold and silver 
virtually banished from circulation, the currency had 
nearly doubled in twenty years—doubled not merely in 
the total, but also in the rate counted by population. 
In 1850 the coin and note circulation of the country was 
ten dollars and a half per capita; in 1860 the coin and 
note circulation was eleven dollars and thirty cents per 
capita; in 1870 the note circulation alone was eighteen 


dollars and forty-two cents per capita, and gold at the 
same time paid duties and did other commercial offices. 

Currency famine was not the disorder of which trade 
fell sick in September, 1873. The nature and stale of 
the currency, not the lack of currency, explains the 
shipwrecks of last year in so far as they are due to pa¬ 
per money. No currency can he sate and sound unless 
it be stable. Currency cannot be stable unless its value 
be fixed and tangible; and if it be not exchangeable 
into coin, or exciiangeable for anything coin will buy, 
currency must fluctuate with the vibrations of trade 
and speculation. 

For years our currency has been infirm, for three 
reasons: 

First. Because its value lias ever been changeable 
and changing, it being not redeemable and not re¬ 
deemed. 

Second. Because it has been ever subject to the 
shifting will ol Congress; and no currency ever can be 
steadlast or reliable which is tinkered or may be tink¬ 
ered every year by congressional majorities or congress¬ 
ional combinations. 

Third. Because the amount has been arbitrary, be¬ 
ing fixed by Congress, instead of being fixed by the 
laws of’ trade as the laws of trade will ever adjust a 
prommissory currency which may be sent home lor re¬ 
demption to be refused and dishonored if it be not paid. 

In view of these and other facts, I was ready to vote 
for free banking. I will vote now for free banking 
with needed safeguards. The contraction involved in 
a resumption of specie payments at once by force ot leg¬ 
islation, I have not advocated. I know too well the 
stride the nation took away lrom the specie standard 
when the legal tender policy was adopted, to suppose 
that stride may be suddenly mea-ured backward now. 
Free banking, however, might be made, I think it 
should be made, an instrument for removing the cur¬ 
rency from the arena of political and congressional ag¬ 
itation, and also an instrument for the gradual and ul¬ 
timate return of specie payments Many plans for 
such free banking have been proposed; some ot them 
are before the two Houses now. None of them have 
been adopted. None of them can, now, it seems com¬ 
mand a majority in the Senate. 

In their stead the bill before us lias now been “per¬ 
fected.” we are told—for such a bill 1 cannot vote. 

It adds $44,000,003 to overdue and uupaid legal ten¬ 
der notes, and §46 000 000 to irredeemable bank paper 
now outstanding; and it declares a permanent if not a 
final departure trom honest and solvent principles. I 
say it adds forty-four millions to tlie legal-tender notes, 
because it requires all that sum to lie put out and kept 
afloat. Twenty-six millions have already gone out trom 
the Treasury, but not gone in fact into actual circula¬ 
tion, and it can all be gradually brought back where 
the residue still is. The payment out of legal-tender 
notes last September and October, amounting to thir¬ 
teen millions or thereabout, was in purchase ot bonds— 
the bonds came from savings banks, and the legal tender 
notes received for them were hoarded to provide 
against a “run.” Since October the currents of enter¬ 
prise have been too sluggish to take up t lie increased 
issue, or even to take up the amount which bad bt-en 
active before. In fact therefore nothing of the forty- 
four million reserve, and little of the legal-tenders j a'd 
out by the Treasury just before the reserve was en¬ 
croached upon, lias ever been felt in the channels of 
trade or exchange. This appears clearly from the large 
increase of bank deposits of late, and from the glut of 
money at money centers. Since December the increase 
of deposits in the banks of New York. Philadelphia, 
and Boston, is $62,630,070—and of legal-tender notes 
$41,160,070. 

As to the issue by the Secretary of the Treasury of 
the twenty-six millions, I make one remark. I have 
denied that the Secretary stupidly or wantonly viola¬ 
ted the law in paying out these notes- I deny it still. 
Two Congresses, with the fact brought to their notice, 
chose to leave open a door ; and when, in 1872 $5,000,- 
000 of the reserve ®as issued, still Congress refused to 
close the door. Having myself insisted at the time 
that the Secretary would, by our non-action, be left to 
construe doubtful statutes, open to the construction 
since given them by two Secretaries in succession— 
having myself moved and urged an amendment to re¬ 
move the doubt, I will not now turn round and blame 
the Secretary, instead of. blaming Congress for an in¬ 
terpretation given in good faith and acquiesced in, neg¬ 
atively at least, by both Houses. I regret the use made 
of the reserve, or rather the action of which that use 
was a part. I think it was not wise or well; but that 
the law plainly forbade it I do not believe. 

The action now proposed, however, puts out all the 
forty-four millions, and keeps it out permanently, and 
adds forty-six millions of bank paper besides, thus 
swelling the paper money $90,000,000. Coupled with 
















































t S 1 irintn°r t l li ! 1R ~ n0tl,ingeVenin the future, in- 

dpmmi n g a ' ,y serioU9 8te i> toward final re¬ 

demption and resumption. 

llns is inflation, utter and hurtful. Spasmodic relief 
n . rom u - temporary and apparent prosperity 

mav come from it, but it takes no heed of the luture 


-*" iaccH t|i i p IiilUrp 

Stress! 0 8m ° 0th the Way 10 de £ rada tmn, disaster, and 

JV ithout necessity or even sore temptation to exten- 
uate tt such a policy spurns the experience of all 

Xd!o’l /“I? 15 f 8 |° n reaSun and ri » ht > and violates the 
pledged faith of the nation as attested by solemn and 

semn e ‘l i‘ CtS , 0t tlie Americarl P eu ple in Congress as¬ 
sembled, by the avowals of every department of the 

Government, and by the declarations in national con¬ 
vention ot the political party which chose most of us 
to the seats we hold, and chose also a Chief Magistrate 
bound by Ins word against every scheme and devise of 
repudiation and dishonor. I mean so to vote that bv 
dm,h| Ct t ie reco r d , °* Congress shall not palter in a 
faith 6nSe ' atK S ia not be stained by a trace of bad 

THE VOICE OF NEVADA AND RHODE I9LVND. 

hlI f V T ART - . 1 do ,lot "tsh to prolong the debate; 

but have been absent for some time on a committee, 

shm.M n M tbee a able t0 t!lke l ' art iu il ; perhaps I 
shouhl not have done so if I had not been so engaged, 

because I do not profess to be an expert in matters of 

~“ anc ?: t Bu J 6Ver Mnce tlle vvar > durin £ these discus¬ 
sions, it has been stated that it was desirable to ap 

proach specie payments. In almost every debate and 
on all occasions it lias been held out that that was ul- 
tima ely to be done, it has been presumed’that .t 
ct uld be gradually done. Now we find ourselves after 
nearly ten years of peace, going in the other direction 
without a reason or a restraint. I have lost faith in a 
gradual approach to specie payments. 1 do not be¬ 
lieve we shall ever do it. I do not believe it will ever 
be accomplished in that way. 1 believe it would he 
better to day if we were issuing $20,000,000 000 to get 
to the point at once where the paper before it was print¬ 
ed upon would be more valuable than after it was print¬ 
ed on, so that we would have a bottom on which to do 
business. That would be more beneficial to the coun- 
try than it would be to pass such a bill as this. This 
bill simply inaugurates a struggle—a struggle that will 
divide this country and absorb all other questions. It 
is the struggle on the one side of those who will seek 
to have good money—money that will measure values- 
who will seek to adopt the rules of political economy 
that the world has recognized from the beginning; and 
on the other side will be those who want irredeemable 
money, who want to avoid t e payment of their debts, 
who want to avoid the obligation that the nation has 
incurred, whose road and whose aim is toward repudi¬ 
ation; and this is the greatest step ever taken by the 
American people toward repudiation. It cannot he 
justified on the ground of necessity ; it cannot be justi¬ 
fied on the ground of honesty. It is a.step in the wrong 
direction which we shall not have the fortitude to re 
trace gradually. It will go on in the wrong direction 
until it produces great disaster. An issue is now made 
that, will last for years. The struggle will he severe- 
the loss to the commerce and business ot this country 
will he immense during the time that it is to come while 
we are getting back to the first principles. The time 
has got to come when the universal measure of value 
will be established iu America; the time lias got to 
come when this country will he solvent; hut before it 
comes we must pass through a period of irredeemable 
currency and through a long struggle to learn a lesson 
which we supx>osed we knew. 

lean add nothing to this debate. I simply wanted 
to make these few remarks to indicate that this was 
the beginning of a struggle in which there is nothing 
but disaster until we finally get back to money that 
has a rial purchasing value, areal measure of value that 
the world recognizes. Until we get back to solvency 
and honesty the struggle will be severe. It looks as if 
it would he protracted, because after ten years’ talk of 
gradual resumption we find ourselves taking a lean— 
not a step, but a leap—iu the other direction refusing 
to say that we mean anything hut expansion.' refusing 
to say that we mean anything hut repudiation of our 
solemn ohl.gation that we would redeem the green- 
backs at some tune, refusing to say anything, but start¬ 
ing oft in the direction of repudiation; audit will be 
hard to come back gradually. You will come back 
with a crash; you will come back with such a crash as 
this country has never seen. You will come hack- 
through struggle. The day will be long remembered 
by the American people when this vote is cast, taking 
the step we are about to take. I think this is tiie sad- 
fiest vote I have ever known to be taken since I have 
been here ;■ I have seen nothing that bore upon its face 
so much promise of evil as the step we are now taking 
. Anthony. Mr. President, I have taken no part, 
in this discussion, and I do not propose to delay this 
vote a moment. I have voted steadily according to my 
judgment, whtch accords with the judgment and the 
interests of those whom I have the honor in part to 

We are now about to do an act which has the quality 


of novelty. In a time of profound peace, with all the 
elements of prosperity and productiveness in as great 
abundance as they have ever been, with money excep 
tionaily plentiful, with only that stagnation and hesita¬ 
tion ot business which is caused by the apprehension 
of what we are now about to do, we are proposing to 
add large y to the paper currency of the country and 
in doing that we refuse to take any, the slightest, meas- 
ure looking to its present or ite ultimate redemption or 
reduction at any time whatever. We are going against 
all the lessons of history, against all the teachings of 
experience, and against all the laws of political econo¬ 
my which have been evolved by the observation and 
the practice ot life. I can only enter against it the pro¬ 
test ot my vote. 1 

OHIO SPEAKS. 

Mr. Thurman. I doubt very much, Mr. President, 
whether the history of this or any other country in 
winch Iree institutions have existed ever presented shell 
a spectacle as we behold here tins afternoon. A great 
party is m power in every department ot this Govern 
ment, executive, legislative, judicial; a great question 
has arisen in the legislative body of this country in 
which that party has a majority of nearly three to one 
and the result ot four months’ deliberation on this ques-’ 
tion is. that the dom.nant party, in disregard ot the 
recommendations ot its Chief Magistrate, in disregard 
ot the recommendations of its Secretary of the Treas¬ 
ury , in utter contempt of the recommendations of its 
experienced Committee on Finance, has agreed to adopt 
tiie measure of one of the minority of the body The 
great Republican party of the Senate of the' United 
States has agreed to take the measure of a Democrat 
and place it upon the statute-books of the country- iu 
defiance of the recommendation of its President’in 
defiance of the recommendations of its Secretary of 
the 1 reasury, and in utter scorn and contempt of the 
recommendation of its Committee on Finance. 

Sir, I can take no credit for this triumph that mv 
Democratic friend from North Carolina [Mr. MerrimonI 
has achieved. The Senator from Indiana [Mr Mor¬ 
ton,] the Senator from Illinois. [Mr. Logan, the Sen¬ 
ator trom Michigan, [Mr. Ferry,) were looked upon as 
that paper money trinity which was to be exalted above 
all other gods m the country; but all their glories have 
g r nt* a " d i aded ’ and u was reserved for the pine woods 
ot Aortli Carolina to shape the financial destiny of this 
country. Disband your party, gentlemen. 1 cannot 
say that that to which I belong is very solid. I Laugh- 
ter.j I regret very much that I should have to repeat 
what was so well said by my friend behind me, that we 
are nothing hut a minority, and whether we are solid 
or whether we are not solid, we have no power to shape 
the legislation of this nation. 

Mr. Stewart Take your votes out and we will see 
how it is. 

Mr. Thurman. As a general rule we certainly have 
not any power to shape legislation. If you who are 
three to our one cannot govern the country, it is time 
for you to abdicate your power and let somebody try 
a hand at it who can. Mr. President, so much for that. 

. u P on l ' ie measure itself I have a word to say. It 
simply means that no man of my age shall ever again 
^ee in this country that kind of currency which the 
framers of the Constitution intended should he the cur- 
rency ot the Union; which every sound writer on polit- 
lcai economy the world over says is the only currency 
that defrauds no man ; it means that so long as 1 shall 
li ve, and possibly long after I shall be laid in the grave 
this people shall have nothing hut an irredeemable pa¬ 
per currency with which to transact their business iLt 
currency which has been well described as *he 
effective invention that ever the wit of man w 

fertilize the rich man’s field at the 
man’s brow. I will have nothing t0 do with ft, Ifr P °° r 
then Delaware and new jersey. 

Mr. Bayard, Mr. President, since the introduction 
of this measure before Congress. I can truly sav i have 
never ooked at it or thought of it in any way connect¬ 
ed with party politics. I could not have done so A 
measure so fraught with sorrow or with benefit to mv 
countrymen could never find me walking by the light 
of party when I came to consider it. It would have 
ee “ impossible. I shall not now disguise my great 
anxiety and my great sorrow for the result of the de- 
i >erations ot the Senate. I have never begrudged the 
tune t-iat has been occupied by them. I have alwavs 
thought the attempt to criticise the manner of Sena ors' 
de late nr the length of the speeches they might make 
on a subject of this kind as something u„warranted 

befme W them nSlder gravity ° f the Subject the F have 

I cannot now take any pleasure, I can gain no relief 
from my great regret that this has been done by one 
partly or by another. I only thank God that no vote 
10 thought, no influence of mine at any stage under 
tr^tion 0 ^iimstanees has been given to aid in the’ perpe- 
t f"" ° f th, T s f great wron " upon the people of the Uni- 
. T * wro "« s their Character; it wrongs their 

ed b So fa n r d no 18 * dl * ma, T da Y them when it is enact- 
f far ' Personally I am glad of the small share 

I have borne in this debate. I am glad also that of 


those who act with me generally, those known asDem- 
ociats, the majority ot them in this Chamber have voted, 
or will vote, in opposition to this measure. This is a 
matter to me of satisfaction. As I said, the effect of 
this measure so tar transcends mere purty questions 
that 1 have not thought of it at all iu connection with 
party. 

Mr Stockton. Mr. President, as I have said noth¬ 
ing on this great subject, as I have felt it proper to pair 
with a member who is necessarily absent on this final 
Vote, the importance of the vote and its effect upon the 
future history ot our country seem to make it p-oper 
that I should occupy a moment or two in expressing my 
regret at the course the Senate has taken in reference 
to this question. 

W hile I have said nothing, I have not been an inat¬ 
tentive li-tener for none have listened so attentively 
to the debates on this question as myself. I have looked 
upon the question, as the Senator from Delaware well 
sail], not as a party question at all. It seems to have 
divided itself, I regret to say, into something like a sec¬ 
tional question rather than a party question. That is 
unfortunate, and I think unwise, so far as those wl^o 
are in favor ot this measure are concerned. 

I he measure itself is an act of national bankruptcy; 
it is an act which, and much less than which, would 
have put any individual on this floor within the terms 
of th® bankrupt act which you have recently re-enacted, 
-t is an actot repudiation, and not only an act of L»ank- 
ruptcy and repudiation, but an act of bankruptcy and 
repudiation for the purpose of keeping in the coffers of 
this country and preserving to the people of this coun¬ 
try money which they are well able to pay. In the 
history of all time there is no such example of national 
dishonor.. There was an excuse to he made in old con¬ 
tinental times when we had no money to redeem our 
issues with ; and that paper, not redeemed at the time 
it was promised to he. has been kept as an honored 
memento in many- a family, because with all their strug¬ 
gles and trials they were unable to meet it precisely 
when it was due. Look at the history of all countries; 
never lias a country in pn sperity, never lias a country 
in the position in which the Administration and its 
friends have led the people to believe this country was, 
and have insisted that it was ever since the end of the 
war, proposed through its legislative bodv to say to its 
people "We advise you to repudiate a debt which you 
are well able to pay.” No, sir; it is dishonor without 
an excuse. The poor debtor who, owing to the trials 
ot the panic, is unable to collect the money due by 
those who owe him, is thrown into bankruptcy, and 
wlmt is called financial disgrace. Every man can feel 
kindly in such a case. Thousands and thousands of 
such men deserve no tone of reproach. But to a coun¬ 
try t lat thinks its prosperity consists in expanding an 
irredeemable currency, that will make no effort and 
suggest no. proposition to redeem the solemn promises 
it has previously made, it will be difficult to point in all 
history. 

I simply desire, Mr. President, on my own account, 
and on account of the people 1 represent, so that I 
might not be misunderstood hereafter, to enter my 
most solemn protest against this day’s business. 

NEXT CALIFORNIA. 

Mr. Sargent. Mr President, to those of us who 
ook upon the passage of this hill as a great calar-; rV 

there is yT/aVope^ ^ * hat 

taTnTriti T: Adn >^tr«tio„ ^eSeduJon 

vocat -’V r ' ft ? d pledges distinctly announced and ad- 
, '" U nn f ° r . e n ie P eo T ,e ai!(1 distinctly accepted by 
them, his hill tramples upon nearly every one of the 
pledges which were given as financial proposition to the 
peop.e. I say, sir, that for one I derive very much com¬ 
fort from the belief that there is another department of 
the Government that may review our action and that 
may set right that which is done wrongly by us. 

It has been said here that from this day a new divi- 
sion is drawn between the statesmen and the politicians 
of the country ; that there is a new division of parties. 

„ 1 I V , ! at 18true - I believe that there are men 
the East ami in the West—I refer to the far West 
ami the far East—men of power representing those 
large constituencies, speaking for large bodies of men 
who will see any party perish and any man perish who 
leads a party which lends itself to the destruction of the 
national credit, which floods this country with irredeem- 
able paper which reverses all the lesson, ay, sir, and 

all the pledges of the past. 

I do not believe there is any issue now before the 
American people growing out of the recent war now 
unsettled, it there have been sucli in the past, that is of 
the momentous consequence to this American people 
that the question is, shall we have sound currency shall 
we have a sound national credit, shall we preserve our 
honor in the eyes of the world, in the full blaze of this 
nay, shall we preserve our honor, or shall we trample 
it underfoot? That is the issue being decided at this 
moment, and as men shall range themselves upon that 
issue I say to them, no matter what their ambition 
may be or wbat their expectations may be, there are 
men in their party and out of it who will scorn to follow 
a leadership which has once betrayed the pledges and 





































3 


principles of the party. Ay, sir, if there were anything 
binding me to allegiance to a banner led by such 
men, L would emancipate myself from it, for I do be¬ 
lieve that high above all party organizations are the 
principles which are to be illustrated and enforced by 
those organiz ations, and high above all expediency is 
the question of national honor. 

I shall vote against this bill kno wing that it will pass. 
I shall voce against it as the last protest which I can 
make against it, and then, sir, my hope is elsewhere 
that it may fail. 

MISSOURI AND THE GERMANS SPEAK. 

Mr. Sciiurz. Mr. President, the few words I am 
going to say will, L hope, be the last speech delivered 
on this hi l. Nobody can h ave listened to the speeches 
which tollowe 1 the close of the general debate without 
being struck by the similarity which they bore to tun 
eral orations, [laughter,] such as we are in the habit.of 
bearing here when we celebrate the memory of some 
departed friend. Gentlemen speak of the two great 
political parties of die land as having so grievously 
sinned against common sense, against the best inter¬ 
ests -of ttie country, against their proclaimed policies, 
that they can live no longer, and that now the time of 
tiler final dissolution has evidently come. Be it so. 
As to that, I have no tears to shed. But, sir, I cannot, 
in the face of what is now to be done here, ana which 
has been very nearly accomplishe I, refrain from speak¬ 
ing a word, not for a pa.ty, but for the country. Con¬ 
templating this legislation, I feel humiliated as an 
American citizen. To think that here in the light of 
the nineteenth century, with all the experiences of his¬ 
tory before us, the American people, who have been so 
proud of standing in point of popular intelligence at 
the head of trie nations of the world, should repeat an 
act of had faith which at the same time is a blunder 
and a folly, and which never was attempted without re¬ 
sulting in disaster and shame—I say I cannot think of 
this without feeling that this country stands at this 
moment humbled before the world Gentlemen of the 
majority may think they have achieved a triumph; 
but 1 tell them the time is not far when they will curse 
the hour which witnessed their alliance with so fatal a 
cause; and before many years have elapsed those who 
8too l here true to the cause ol justice and reason will 
point with pride to the votes they have given and to 
the words thev have spoken. Although overwhelmed 
by numbers to day, their triumph is sure. Nor <Jo I 
think the day is far off when that portion of the Ameri¬ 
can people who now give themselves up to so strange 
an infatuation will recover their sound senses and in¬ 
dignantly shake off the rule of that statesmanship 
which is now so busy to lead the country on toward 
ruin and disgrace. 

THE PATIENT INFLATIONIST. 

Mr. Carpenter. Mr. President. I ought to he the 
wisest man on finance Vnat the country can aff>rd. I 
have listened to some seventy five speeches which 
have been nv^qe directly at my innocent ears. But I 
congratulate the Senate that they are in no danger 
tnat „ shall pour hack upon them what I have received, 
either in its crude form or in any digested style. I 
shall not discuss this great financial problem in the 
eight minutes that are now left of my time. I only 
rise to say to our friends outside of the Senate that the 
reason we sit here silently and are basted and roasted 
and turned to-day like chickens on spits, is that we 
are anxious to settle this question. We have resolved 
am mg ourselves to say nothing more about it, but 
confine ourselves to voting ; that when smitten upon 
one cheek we will turn the other also, and always vote. 

TEXAS FOR HONEST MONEY. 

Mr. Flanagan. It has been said that it was a war 
measure that caused the greenbacks to come into exis¬ 
tence. There is no war now, and now is the time in 
good faith to prepare for their redemption; and there 
is no way of redeeming them except you recognize 
coin in the transaction. I see no such idea here; it is 
entirely ignored, and it may go hence to every portion 
of this broad nation and to the civilized world that the 
day for redemption and for a coin currency is ignored. 
The examples of other nations of the earth are in¬ 
voked from time to time, and it is said by Senators 
that they are using a paper currency, ignoring gold in 
every sense of the word. That will not do. The peo¬ 
ple will not be satisfied with that. The workingmen 
in their machine-shops, in your navy-yards, in the shoe- 
shops, and elsewhere, the plowman in his corn-field, in 
his potato-patch, in his tobacco-field, in his cotton- 
field, the bone and sinew of this mighty nation, will 
hold the Senate to a strict accountability at an early 
day; and they will not he satisfied with my distin¬ 
guished friends who say they care not for assuming 
the responsibility of increasing this debt and making 
no preparation, either directly or remotely, to redeem 
the solemn pledge found on your statue book. 

There is a line, and it is a broad line ; clear and un¬ 
mistakable, as has been already stated by my distin 
guished friend the Senator from Ohio [Mr. Thurman] 
of the Democratic party, and by my distinguished 
friend on the other side of the question from Califor¬ 
nia [Mr. Sargent] representing the Republican party. 
The Senator from California has seen proper to speak 


of that which weal! knew, that there is a power which 
may yet interfere and save ibis nation. Upon that 
branch of the subject I aiu clearly convinced of a fact 
that 1 think is equally clear to the balance of the Senate, 
that that glorious achievement of the President of the 
United States which was consummated under the ap¬ 
ple tree at Appomattox will dwindle into a small mat 
ter when compared with the great effort it he will ex 
ercise the power that the Consiitution has given him to 
veto this hill that we are about to pass. It will make 
him stronger in this nation than his mighty efforts 
when he led the valiant soldiers ot the American na¬ 
tion to put down the reoellion. I have no hesitancy 
about Baying this. Tins question is to be felt; and I 
am proud to know on this occasion, as has been well 
said, that it has been no party question. But what 
are the facts? The responsibility is still upon us 
as Republicans. The Democrats can take care of 
themselves. They have done it well; they have 
done it nobly, tiiey have done it magnanimously; 
but what are the facts? In our Philadelphia plat¬ 
form we are bound by solemn pledge as well as the 
statutes ol the United States declare that we should 
and would do a particular thing ; and now to spread 
$90,000,000 broadcast over tlie country and repudi¬ 
ate everything that we have done heretofore on that 
branch of the subject—I say it will be bard for that 
to be explained satisfactorily to the people of this 
great nation. It cannot be done; if will be a foul 
slander upon them to say that it should be done. It 
cannot, nor will it be. 

SENATOR MORTON PRESENT, PAST AND TO COME. 

Mr Morton. Mr. President, there will be an op¬ 
portunity to reply to the most extraordinary speeches 

I have ever listened to in this body. They will go upon 
the record, and that onportunity will be improved 
hereafter. I forbear for the jyesent, so far as I am 
concerned. I ask a vote. 

[This was said on the 6th of April. It is now the 6th 
of May, and yet Senator Morton has not made the 
promised reply to these weighty speeches. Until he 
has done so it will be in order to quote what he said 
in the Senate, Dec. 16, 1868, on this same question of 
currency redemption. These are Senator Morton’s 
own words, as they stood before he began to eat them 
at this session; 

If the currency is depreciated, fluctuating and deceptive, 
the prosper it i/ of the country must inevitably be seriously injured, 
and its general progress and development delayed. In what¬ 
ever country paper has been made a legal tender, it has 
invariably driven gold and silver from the circulation, 

and in great part from the country.Thus it was 

,during the French revolution, when the assignats, a legal 
tender currency like our own, drove French gold into 
all of the neighboring countries, so that when the assig¬ 
nats finally collapsed, as they did in a single day, France 
found herself almost destitute of coin. Why is our 
currency depreciated? And why would it be depre¬ 
ciated if the government did not owe a single bond? 
Because the greenback note is a jrromise by the govern¬ 
ment to pay so many dollars on demand, which it do s not pay. 
The promise is daily broken, and has long been dishonored. 
The note draws no interest, ami the government has 
fixed no time when it will pay it. Under such circum¬ 
stances, the note must be depreciated. The greenback 
currency is a part of the public debt, for the redemption 
of which the faith of the nation is solemnly pledged. The re 
demptiou of this pledge is not only demanded by every 
principle oj national honor, but is imperatively demanded 
by the interests of the people, collectively and individually. 

II the greenback note is to be regarded as an obligation, 
for the payment of which the faith of the government 
is pledged, the continued failure of the government to make 
any provision for its redemp'ion cannot be regarded in any 
other light than repudiation. It cannot be shown that the 
legal and moral obligation to pay those bonds [of the 
United States] at maturity is greater than that resting 
upon the government to make prompt provision for the 
redemption of the greenback currency.] 

In response to Seuator Morton, the chief Clerk pro¬ 
ceeded to call the yeas and nays. 

Mr. Bayard, (when his name was called.) On this 
subject I regret to say that I have paired with the Sen¬ 
ator from Georgia, [Mr. Gordon ] If he were here he 
would “vea,” and I should certainly vote “nay.” 

Mr. Flanagan, (when liis name was called.) I am 
paired with the Senator from Tennessee, [Mr. Brown- 
low ] If he were here he would vote “yea,” and I 
should certainly vote “nay.” 

Mr. Mitchell, (when his name was called) On 
this question lam paired with the Senator from Massa¬ 
chusetts, [Mr. Boutwell.] If he w 7 ere here he would 
“nay,” and I should vote “yea.” 

Mr; Morrill, of Maine, (when his name was called.) 

I am paired with the Senator from Rhode Island. [Mr. 
Sprague ] who if here would vote “yea,” and I should 
vote “nay.” 

Mr. Stockton, (when his name was called.) I de¬ 
sire to announce that on this question I am paired with 
the Senator from North Carolina, [Mr. Ransom ] I 
should vote “nay” and he would vote “yea” if pres¬ 


ent. I desire also to announce that Governor Steven¬ 
son, of Kentucky, is paired with thV Senator from Flor¬ 
ida, [Mr. Conover] Senator Stevenson would vote 
“nay’ and the Senator from Florida would vote “yea” 
if present. 

Mr. Wrigiit, (when his name was called.) I am 
paired with the Senator from Vermont, [Mr. Edmunds ] 
If present he would vote “nay,” and I should vote 
“yea.” 

The roll-call having been concluded, the result was 
announced—yeas 29, nays 24; as follows: 

Yeas —Messrs. Allison, Bogy, Boreman, Cameron, Carpen¬ 
ter. CiaytOs , Dorsey, Ferry of Michigan, (xoldtli waite, Harvey, 
Hitchcock, Ingalls, .lohnst'in, Lewis, Logan, McCreery, Merri- 
mon, Morton, Norwood, Oglesby, Patterson, Pease, Pratt, 
Rain-ey, Robertson, Spencer. Tip'on, West and Wiudom— 29. 

Na vs— M- s-rs. Anthony, Chandler, Conkling, Cooper, Cra- 
gin, Davis, Fenton, Frelinghuysen, Hager. Hamilton of Mary¬ 
land, Hami ton of Texas, Hamlin. Howe Jones, Kelly, Morrill 
of Vermont, Sargent. Saulsbury, Schurz, Sco;t, Sherman, 
Stewart. TliU' man and Wadleisrh—24. 

Absent —Messrs. Alcorn, Bayard, Boutwell, Browtdow, 
Buckingham, Conover, Dennis, kdmund-, Ferry of C >nneeti- 
cut, Flanagan, Gilbert, Gordon, Mitchell, Morrill of Maine, 
Ransom. Sprague, Stevenson, Stockton and Wright—19. 

So the bill was passed. 

Mr. Wright. I move to amend the title of the bill 
so as to make it read : 

A bill to fix the arnouut of Uirted States notes and the circu¬ 
lation of national banks, and tor other purposes, 

The motion was agreed to. 

II. A VOICE FROM THE WHITE HOUSE. 

It was more than two weeks after the debate when the 
Bill, having passed the House also, and been discussed 
at two Cabinet meetings, got back to the Senate again 
with veto stamped upon it by Gen. Grant. Ilis mes¬ 
sage, which surprised everybody and dismayed the in¬ 
flationists, was originally prepared, it is said, to be sent 
in as a special communication to Congress, without re¬ 
gard to any particular bill. But the Senate bill hap¬ 
pened to come just in time to turn the declaratory mes¬ 
sage into 

* THE PRESIDENT’S VETO. 

Herewitli I return Senate bill No 617, entitled, “An 
act to fix the amount of United States notes and the 
circula ion of national banks, and for other purposes,” 
without my approval. In doing so, I must express my 
regret at not heir g able to give my assent to a measure 
which has received the sanction of a majority of the 
legislators chosen by the people to make laws lor their 
guidance, and I have studiously sought to find sufficient 
arguments to justify such assent, but unsuccessfully. 
Practically, it is a question whether the measure under 
discussion would give an additional dollar to the irre¬ 
deemable paper currency of the country or not, and 
whether by requiring three-fourths of the reserve to be 
retained by the banks and prohibiting interest to be re¬ 
ceived on the balance, it might not prove a contraction; 
but the fact cannot be concealed that, theoretically, 
the bill increases the paper circulation one hundred 
millions of dollars, less only the amount of reserves re¬ 
strained from circulation by the provision of the second 
section. The measure has been supported on the the¬ 
ory that it would give increased circulation. It is a 
fair inference, therefore, that if in practice the measure 
should fail to create the abundance of circulation ex¬ 
pected of it, the friends of the measure, particularly 
those out of Congress, would clamor for such inflation 
as would give the expected relief. 

The theory in my belief was a departure from true 
principles of finance, natural interest, national obliga¬ 
tions to creditors, Congressional promises, party pledges 
on the part of both political parties, and of personal 
views and promises made by me in every annual mes¬ 
sage sent to Congress, and in each inaugural address. 
In my annual message to Congress in December, 1869 
tiie following passages appear: “Among the evils grow¬ 
ing out of the rebellion and not yet referred to, is that 
ot an irredeemable currency. It is an evil which I 
hope will receive your most earnest attention. It is a 
duty, and one of the highest duties of Government to 
secure to t ie citizen a medium,of exchange of fixed, 
unvarying value. This implies a return to a specie 
basis, and no substitute for it can be devised. It should 
be coo.meneed now, and reached at the earliest practi¬ 
cable moment, consistent with a fair regard to the in¬ 
terest of the debtor class. Immediate resumption, if 
practicable, would not be desirable. It would compel 
the debtor class to pay beyond their contracts, the pre¬ 
mium on gold at the date of their purchase, and would 
bring bankruptcy and ruin to thousands. Fluctuation 
however, in tiie paper value of the measure of all val¬ 
ues, gold, is detrimental to the interests of trade. It 
makes the man of business an involuntary gambler, for 
in all sales where future payment is to be made, both 
parties speculate as to what will be the value of the 
currency to be paid and received. I earnestly recom¬ 
mend to you, then, sucli legislation as will insure a grad¬ 
ual return to specie payments and put an immediate 
stop to fluctuations in the value of currency.” I still 
adhere to the views then expressed. As early as De¬ 
cember 4, 1865, the House of Representatives passed a 
resolution, by a vote of 144 yeas to 6 nays, concurring 























4 


in the views of the Secretary of the Treasury in rela 
tion to the necessity ot a contraction of the currency, 
with a view to as early a resumption of specie pay¬ 
ments as tne business interests of the country will per- - 
mit, and pledgin'; co-operative action to this end as 
speediiy as possible. The first act passed bv the Forty- 
first Congress, on the I8ch day of March, 1869, was as 
follows : 

‘•An act to strengthen the public credit of the United States. 
Be it enacted, etc. That in order to remove any doubt as to the 
purpose of the Government to dis ;li <rge all its obligations to tlie 
public creditors, and to settle conflicting questions and interpre¬ 
tations of the law by virtue of which suHi obligations nave been 
contracted, it is hereby provided and declared that the faith of 
the United States is solemnly pledged to the payment in coin, 
or its equivalent,of all the obligations of the United States, and 
of all the interest-bearing obligations, except in cases where the 
law authorizing the issue of any such obligations has expr. s-ly 
provided that the s irae may be paid in lawful money, or in other 
currency than gold and silver, but none of the said interest- 
bearing obligations not already due. shall be redeemed or paid 
before maturity, unless at such times as the United Stvtes 
notes shall be convertible into coin at the option of the holder, 
or unless at such time bonds of the United State- bearing a low¬ 
er rate of intere-t tnan tne bonds to be redeemed, can be sold 
at par in coin. And tlie United States also solemnly pledges its 
faith to make provision, at the earliest practicable period for the 
redemption of the United States notes in coin.” 

Tins act still remains as a continuing pledge of the 
faith of tlie United States to make provision at the ear¬ 
liest practicable moment for the redemption of the 
United States notes in coin. A declaration contained 
in the act of June 30 1864, created an obligation that 
the total amount of United States notes issued or to be 
issued, should never exceed tour hundred millions of 
dollars. The amount in actual circulation was actually 
reduced to three hundred and fifty-six millions of dol¬ 
lars, at which point Congress passed the act of Feb¬ 
ruary 4, 1868, suspending the further reduction of the 
currency. The forty-four millions have ever been re¬ 
garded as a reserve, to be used only in case of emergen¬ 
cy, such as occurred on several occasions, aud must 
occur when from any cause revenues suddenly fall be¬ 
low expenditures ; and such a reserve is necessary be¬ 
cause tlie fractional currency) amounting to fifty mil¬ 
lions is redeemable in legal tenders oil call. 

It may be said that such a return of fractional cur¬ 
rency for redemption is impossible. But let steps be 
taken for a return to a specie basis, and it will be found 
that silver will take the place of fractional currency as 
rapidly as it can he supplied. When the premium on 
gold reaches a sufficiently low point with the amount of 
United States notes to be issued, permanently fixed 
within proper limits,and tlie Treasury is so strengthened 
as to be able to redeem them in coin on demand, it will 
then be safe to inaugurate a system of free banking, 
with such provisions as to make compulsory redemp¬ 
tion of the circulating notes of the banks in coin or in 
Unite I States Dotes, themselves redeemable and made 
equivalent to coin. As a measure preparatory to free 
banking, or for placing the Government in a position 
to redeem its notes in coin at the earliest practicable 
moment, the revenues of the country should he in¬ 
creased so as to pay current expenses, provide for the 
sinking fund required by law, and also a surplus to be 
retained in the Treasury in gold. 

I am not a believer in any artificial method of making 
paper money equal to coin, when the coin is not owned 
or held ready te redeem the promises to pay, for paper 
money is nothing more than promises to pay, and is val¬ 
uable exactly in proportion to the amount of coin that 
it can he converted into. While coin is not u»ed as a 
circulation medium, or the currency of the country is 
notconvertibleintoitatpar.it becomes an article of 
commerce as much as any other product. 

The surplus will seek a foreign market, as will any 
other surplus. The balance of trade has nothing to do 
with the question. Duties on imports being required 
in coin, create a limited demand for gold. About 
enough to satisfy that demand remains in the country, 
and to increase this supply I see no way open but by 
the Government hoarding, through the means above 
given, and possibly by requiring the national banks to 
aid. 

It is claimed by the advocates of the measure re¬ 
turned that there is ar. unequal distribution of the bank¬ 
ing capital of the country. I was disposed to give great 
weight to this view of the question at first, hut on re¬ 
flection. it will be remembered that there still remain 
four millions of dollars of authorized note circulation as¬ 
signed to States having less than their quota, not yet 
taken. 

In addition to this, the States having less than their 
quota ot bank circulation, have the option of twenty- 
five millions more, to be taken from those States hav 
ing more than their proportion. When this is all taken 
up. or when specie payments are fully restored, or are 
in rapid progress of restoration, will be the time to con¬ 
sider the question of more currency. 

U. S Grant. 

Executive Mansion , April 22, 1874. 

On April 23th the vetoed bill was taken up in the Sen¬ 
ate. The inflationists were anxious to have no debate 
on the merits of the bill, which failed to pass, not ob¬ 
taining the necessary two-thirds. The vote in detail 
was as follows: 


Yeas—Messrs. Allison, Bogy, Boretnan, Cameron,Carpenter. 
Clayton, Conover, Dennis, Dorsey, Ferry of Michigan, Gold- 
thwaitp, Gordon, Harvey. Hitchcock, Ingatis, John-ton, Lewis, 
Logan, McCreery, >ler>imon, Mitchell, Norwood, Ogesby, Pat¬ 
terson, Pease, Pratt, Ramsey, Robertson, Spencer, Sprague, 
Tipton, West, Windom, and Wright—154. 

Nays—Messrs. Anthony, Bayard, Boutwell, Buckingham, 
Chandler, Coukling, Cragin, Dayi-, Edmunds, Kenton, Ferry 
of Connecticut, Fianagan. Freliughuy-en, Gilbert, Hogan, 
Hamilton or Maryland, Hamilt n of Texas, Hamlin, Howe, 
Jones, Kelley. Mori 1 of Vermont, Sargent, Scott, Sherman, 
Stevenson, Stewart, S'ockton, Thurman and Wadleigh—30. 

The pairs were Messrs. Morton and Ransom for the 
bill, with Messrs. Morrill, (Maine,) and Schurz against 
it. The absentees not paired were Messrs. Alcorn and 
Brownlow for the bill, and Messrs. Cooper and Sauls- 
bury against it. The new Senator from Massachusetts, 
Mr. Washburn, had not taken nis seat. Had he also 
been present the full vote of the Senate would have 
been 38 to 35. Not one vote was changed by the veto, 
and the division was exactly in accordance with that 
published in the Financial Record of April 24, except 
that Mr. Gilbert, of Florida, whom we inadvertently 
classed with the inflationists, is really against them. 

The Veto in the Northwest. 

The veto has proved to be “a mighty persuader of 
Republican opinion," and not without effect on Demo¬ 
crats. The Milwaukee News, a Democratic paper, 
which went for “more money” before the veto, now 
pronounces against inflation. The Milwaukee Sentinel 
opines that the great West is aroused to the vindica¬ 
tion of its rights—meaning its right to have a depreci¬ 
ated currency. The Janesville Gazette, on tlie other 
hand, cautious the Washington politicians to consult 
the people before they rashly make war on the Presi¬ 
dent. The Burlington IJawkeye welcomes the issue, 
and it invites the inflationists to make it without delay 
if they think it will pay dividends. The Des Moines 
Register hopes t ie Western and Southern members of 
Congress will have the courage to fight it out on as ob¬ 
stinate and courageous a line as the President himself 
has laid down. The Terre Haute Express calls on Mor¬ 
ton to make a direct issue with the President, aud to 
appeal to tlie country for support. The Evansville 
Journal calls for indignation meetings to overawe the 
President. The Illinois State Journal beiieves that the 
Republican party of Illinois will side with Logan and 
Oglesby on this issue. The Chicago Tribune gives 


these figures recording the position 

Sastaiu. 

of Newspapers : 

On the 
Oppose. fence. 

Illinois. 


41 

14 

Indiana. 


13 


Michigan. 

.24 

5 

i 

Wisconsin. 


7 

1 

Minnesota. 

.12 

i 


Iowa. 


16 

2 

Kansas. 


11 

. . 

Nebraska. 

.2 

1 

1 

Missouri. 


7 

• • 

Territories... ..... 

.4 

186 

105 

19 

The analvgis of the Illinois list, 

so far as 

known to 


us, shows 35 Republican newspapers, and 20 not Re¬ 
publican, now sustaii iug the financial views of the 
President; and 27 Republican papers, and 17 not Re¬ 
publican, now agreed in opposing those views. 

What is to be Done Next. 

The Chicago Times, in an appeal to its readers at the 
West, where the great battle for honest money is to be 
mainly fought, admirably states the duty of the hour; 

The business men of Chicago and other western 
cities have protested against inflation and repudia ion. 
The first victory is on their side. Now let them pull 
otf their coats and hold fast to what they have se¬ 
cured, or it will slip away from them again next win¬ 
ter. But let them hold fast aud push on, and a second 
and final triumph will be theirs next November. 
Their forces are invincible. Nine-tenths of the busi¬ 
ness men, professional men, and men of education 
generally are of one mind. The Germans are with them 
almost to a man. Fully one half of the farmers and the 
most intelligent mechanics are with them. The Presi¬ 
dent is with them. Nothing is wanting but concert of 
action, and earnest effort for the dissemination of sound 
doctrine and correct information It is not enough that 
the leading newspapers expose the fallacies of the infla¬ 
tionists, it is not enough that clearing-house associa¬ 
tions, boards of trade, and merchants’exchanges a'dopt 
vigorous resolutions. There must be organization. 
Clubs ought to be organized throughout the West includ¬ 
ing in their membership not only those who are promi¬ 
nent as business men and financiers, but all who feel an 
interest in the establishment of a sound financial policy, 
in the general welfare and prosperity of the country, and 


in the maintenance of the public credit. These clubs 
should exist and co-operate for the purpose ot awaken¬ 
ing thought, inculcating sounds principles, disseminat¬ 
ing information, and preparing for efl'ective action 
when the congressional elections take place next fall. 

A repudiition newspaper has lately said, “lou have 
refused us $800,000,000 of paper. Very well. Wait 
until after the elections next fall, and we will take 
$1,000,000,000 at least, in spite of you.” And this 
threat is undoubtedly in the hearts ot every one.of the 
repudiationists, though most ot them are too prudent 
to utter it. Tnis is what all the Washington talk 
about a compromise measure means. It is a gamblers’ 
device to deceive the country to its ruin. It is a dan¬ 
gerous game, undoubtedly. It is a game in winch the 
Wall street gamblers, the money sharks, the confidence 
swindlers, the stock and bond speculators, the whole 
confraternity of “cheap money” swindlers, hope to 
wfn by deceit and false pretenses. And it will not be 
defeated by Messrs. Ease & Comfort, who sit in their 
cushioned office chairs and flatter themselves that the 
President's veto is a finality on the currency question. 
Repudiation has got a footing vastly stronger than it 
had in 1868.- The “States lately in rebellion,” Texas 
alone excepted, are “solid” for repudiation. In 1868, 
I’endletonism had hardly any footing in the South. 
The eastern and midtile States are a unit in favor of 
resumption. Tlie Pacific States are on the same side. 
The West is the battle ground on which tlie most tre¬ 
mendous of all the bloodless political contests in our 
history must be fought. The repudiation gamblers 
assume, with vast impudence, that the West is on 
their side. The assumption is unwarranted. Never¬ 
theless, it is true that, in the great contest between re¬ 
pudiation and resumption, which inevitably approaches, 
the West will exhibita division more nearly equal than 
any other section. On which side the balance of po¬ 
litical power in the West will fall may depend on tlie 
promptness and vigor with which the resumptionists 
put their forces in the field. 

What American Statesmen have said of 
Paper Money. 

We have quoted the opinions of Washington, Erank- 
lin, Adams, Jefferson, Madison, etc, against paper 
money. Coming down to the second great era of 
American Statesmen, we find tlie same opinions kept 1 
up. Gen - Jackson was one of the most determined, 
powerful and influential foes to an inconvertable cur¬ 
rency whom this country has ever seen. 

“The Constitution of the United States,” he wrote, 
“unquestionably intended to secure to the people a circu¬ 
lating medium of gold and silver. The paper system being 
founded on public confidence, and having of itself no 
intrinsic value, it is liable to great and sudden fluctua¬ 
tions, thereby rendering property insecure aud the wa¬ 
ges of labor unsteady and uncertain.” 

John C. Calhoun, in 1837, thus expressed himself: 

“The banking system concentrates and places this 
power in the hands of those who control it. and its force 
increases just in proportion as it dispenses with a metal¬ 
lic basis. Never was an engine invented better calcu¬ 
lated to (dace the destiny of the many in the hands of 
the few, or less favorable to that equality and independ¬ 
ence which lie at the bottom of all free institutions.” 

Henry Clay, though an ardent friend of a National 
bank, opposed an inconvertible currency. Thus he 
spoke in the Senate in 1837: 

“If there be in regard to currency one truth which 
the united experience of tlie whole commercial world 
has established, I had supposed it to be that emissions 
of paper constituted tlie very ivorst of all conceivable spe¬ 
cies of currency. The objections to it are, first, that it 
is impracticable to ascertain, a priori, what amount cau 
be issued without depreciation ; and, second, that there 
is no adequate security, and in the nature of things, 
none can exist against excessive issues.” 

Daniel Webster declared, in 1826, the true doctrine 
of tlie Constitution, as follows: 

“By paper money in its obnoxious sense, I understand 
paper issued on credit alone, without capital, without 
funds assigned for its payment, resting only on the good 
faith and future ability of those who issue it. Most un¬ 
questionably there can be no legal-tender in this country under 
the authority of this Government or any other , but gold and sil¬ 
ver.” 

Thomas H. Benton, that stout old bullionist, was 
the life-long foe of irredeemable paper money : 

“If I were going, said he, in 1831, “to establish a 
working man's party, it should be on the basis of hard 
money—a hard money party against a paper par¬ 
ty. Paper money banks tend to aggravate the inequal¬ 
ity of fortunes, to make the rich richer, and the poor 
poorer, to multiply nabobs and paupers. Paper money 
is injurious to the laboring classes, because they receive 
no favors, and the price of the property they wish to 
acquire is raised to the paper maximum, while wages 
remain at the specie minimum.” 




































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FINANCIAL RECORD. 

“WE NEED ONE THING BESIDES MORE MONEY, AND THAT IS BETTER MONEY ."—Senator Zach. Chandler . 

. . F ~~ -------- 

VOL. I. THURSDAY, FEBRUARY 19, 1874. NO. 3. 


The Financial Record will be published weekly three 
months, and may be continued beyond that period. It will 
be, as its name indicates, a record of facts and opinions on 
the questions of National Finance which are now so impor¬ 
tant to the American people; and all persons, editors or others, 
to whom it is sent, are invited to use it freely, and to copy from 
it without hesitation if they see fit. It will be sent free of 
postage, to all persons who will remit 50 cents to the publishers 
at No. 6 Pemberton Square, Boston. All editors who may re¬ 
ceive it are invited to send their papers in exchange. 


The Spirit of Congress. 

The Senate has occupied all the past week in dis¬ 
cussing the bUl to redistribute the national bank circu¬ 
lation, but with very little result; the differences of 
opinion on the currency question growing greater 
rather than less. A well defined line can be drawn be¬ 
tween those who favor and those who oppose inflation, 
but, on either side, hardly any two stand together in 
support of the 6ame set of measures. Free banking 
without limitation, a specified addition to the pres¬ 
ent authorized circulation, a withdrawal of various 
specific sums from existing banks to be issued to others, 
—these are only a part of the amendments offered; and 
Mr. Buckingham has carried a motion to recommit the 
bill. On Wednesday and Thursday a vote was reached 
on two or three amendments. The nearest approach 
to a test was on Mr. Scott’s proposition, that all 
national bank currency shall be redeemed in spe¬ 
cie or interest-bearing bonds. This was lost, 28 
to 30,—ten Senators being paired. It is thought this 
vote shows a majority to be against further issues of 
currency, but nothing can be known with certainty 
till a more decisive vote than were those of Thursday 
by which the inflationists were defeated. 

To-day, (Thursday), the Senate rejected Mr. Cam¬ 
eron’s proposition for free banking, 26 to 32, some of 
the strong advocates of inflation helping to swell the 
majority. After another equally indecisive vote, the 
Senate instructed the finance committee to report a bill 
for the convertibility of United States notes into gold 
coin or interest-bearing bonds, and for free banking. 
Mr. Merrimon at once entered a motion to reconsider, 
which is still pending. In the brief debate that follow¬ 
ed, Mr. Conkling spoke most emphatically against in¬ 
flation. The proposition, he said,involved a lie; paper 
money, without coin behind it, is simply a false promise 
to pay, and Congress would be guilty and mad if it 
should legalize more irredeemable paper. Previously 
Mr. Cameron (Penn.) had said: “We had no money 
when our people fought Great Britain, and by the ex¬ 
periment of paper dollars conquered the armies of the 
world !” 

The most noticeable fact brought out by this debate, 
so far as the bill itself is concerned, is that not one 
Senator from the States that are to yield a part of their 
circulation has spoken against the redistribution of 
$25,000,000 proposed by the committee. Some views 
advanced by Senators are worthy of record. Mr. Scott 
(Penn.) thought the Western Senators answered them¬ 
selves when complaining that they could not keep the 
little money they have from flowing to the East; and 
called attention to the fact that with free banking be¬ 
fore the war, the same States had a small circulation 
per capita, that have one now ; while the States that 
then had a large circulation have a larger one to day. 
This to show the absurdity of estimating by popula¬ 
tion the amount of money needed for business. Mr. 
Merrimon (N. C.) confounded cause and effect when 
he said that a laTge part of the capital of the country 
is concentrated at the East because the East has an ex¬ 
cess of bank issues. Mr. Saulsbury (Del.) likened an 
issue of more currency to a debasement of coin, and : 
pithily put the argument against inflation thus : “If 
with the present circulation the government is unable 
to redeem its promises, will not a further increase of ^ 
the currency render it still less able V’ 


Both Senators from Maine spoke against inflation, 
and Mr. Hamlin warned the friends of free banking 
that, if they carried their point, the States now having 
an excess would establish four banks for every one es¬ 
tablished in the other States. 

Mr. Chandler (Mich.) once more showed the evils of 
inflation, by a quotation of the decreasing prices of 
Confederate notes as the issues were increased, and for 
this he was soundly berated by Messrs. Logan and Mor¬ 
ton. Yet the Confederate money was only a repetition 
of the “experiment of paper dollars” by which, accor¬ 
ding to Mr. Cameron, our fathers “conquered the arm¬ 
ies of the world.” 

In the House, on Saturday, three speeches on the 
currency question are all that demand notice this week. 
The speakers were Messrs. Small of New Hampshire, 
and Fort and Eden of Illinois, the first in favor of doing 
nothing; the second in favor of “a volume of money 
equal to the current exchange of commodities and the 
current wages of labor”—whatever that may mean; 
and the third,—so far as can be ascertained,—in favor 
of withdrawing all national banknotes and issuing 
greenbacks for everything, until everybody has got 
enough. 

Senator Sherman’s bill for resumption and free bank¬ 
ing has not been acted upon, and does not meet with 
much favor. The inflationists object to it because it 
does not provide for free banking until after resump¬ 
tion ; and those who favor resumption regard its pro¬ 
visions as harsh when in operation, and yet likely by 
the irregularity of operation to cause fluctuation of val¬ 
ues. And since the withdrawn greenbacks may be re¬ 
issued, resumption under this plan is by no means cer¬ 
tain. 


Plans for Resumption. 

One great difficulty at the present moment is that the 
friends of specie resumption do not unite upon any one 
plan, but lose much of their strength by offering various 
plans for the same purpose. New plans are to be wel¬ 
comed, however, and within a few days a new plan 
from a most intelligent source has been added to the 
list, deservedly meeting with much favor. We copy it 
in another column, together with some of the admirable 
arguments in its favor, which also apply to all real ef¬ 
forts towards resumption. 

Trusting that the time is nearly come when Con¬ 
gress will bring to a conclusion its discussion of the true 
financial policy, we devote this number largely to an 
examination of the prominent plans for resumption, in 
the hope of contributing something toward the very 
desirable end of concentrating opinion on the most 
feasible of them all. 

These prominent plans are : 

1. That of C. E, Bockus, Esq., to which we have 
above alluded. 

2. That of Senator Sumner, which proposes to issue 
6 per cent compound interest notes in exchange for 
greenbacks to be destroyed. 

3. That of Senator Sherman, which proposes to re¬ 
sume on the 5th of January, 1875, using U. S. bonds or 
specie at the option of government. 

4. That of Hon. H. L. Pierce, which proposes the is¬ 
sue and exchange of gold greenbacks to the extent of 
$10,000,000 per month, but which are only payable af¬ 
ter two years, at the rate of §3,000,000 per month. His 
plan has been modified in the Committee on Currency 
so as to issue $2,000,000 a month, and is reported to the 
House in that shape. 

Plan No. 1,—that of Mr. Bockus is to withdraw the 
$25,687,800 greenbacks reissued already out of the 
(miscaUed) reserve of $44,000,000, and also to destroy 
this whole “reserve” so effectually that it shall not be 
heard of again; then to prohibit the banks from lend¬ 
ing money on gold, or counting their own gold as part 
of their reserve until after resumption. 


When these two measures, which it is assumed will 
bring gold nearly to par, have accomplished that object, 
then the plan proposes to redeem and destroy with our 
gold fund 25 or 30 millions of greenbacks, and to con¬ 
tinue this redemption as fast as the revenues will permit. 

We welcome this and all bona fide plans of re¬ 
sumption. It has the merit of simplicity, it does not 
pledge the nation to resumption at any fixed day, nor 
until the result of the proposed experimental measures 
shall have proved practically'effectual. . 

But these objections occur to us : (1), that this process 
of contraction may not prove effective, and, (2), that, 
like all other steps toward resumption, if effective, it 
will be to some extent, painful, and,underpressure, can 
be easily repealed, just as Mr. McCulloch’s policy of 
contraction was strangled by Congress. 

Plan No. 2, (Mr. Sumner’s), even if modified by a 
lower rate of interest, as recommended by the Boston 
Board of Trade, is liable to work too sharply, and, in 
that case, would easily and surely be repealed. 

Plan No. 3 is subject to the same objection, with the 
additional one that it goes into effect absolutely on a 
fixed day without providing any preparation, except 
what the apprehensions of the community may produce 
voluntarily. 

Plan No. 4, in our judgment, is free from all the ob¬ 
jections which apply to the others, in case it can be 
substantially restored to Mr. Pierce’s original form, 
or only modified so that the gold greenbacks shall ma¬ 
ture at the rate of only §2,000,000 per month, while re¬ 
taining the provision for their issue at a. much faster 
rate. This would get them into the hands of the pub¬ 
lic, and get the government committed to their payment 
before any such pressure could be affected by tlienr as 
to cause the repeal of the act. 

Opinions differ as to the amount of withdrawal which 
will be sufficient, Mr. J. S. Ropes holding that some¬ 
thing near §200,000,000 should be withdrawn, while C. 
E. B. believes that twenty-five or thirty millions will 
be sufficient, although he provides that the proc ess shall 
go on as fast as the government finds it convenient. 
We fully agree with him that the first step should be to 
fund the twenty-five million of extra greenbacks just 
put out. In case a temporary loan, to be met by the 
proceeds of further taxation, is deemed inexpedient, it 
might be equally proper and rather safer to fund this 
over-issue by selling long bonds to the full extent nec¬ 
essary. We bought in the bonds too rapidly and can 
re-sell them or perhaps better still, sell currency bonds 
for a higher price than we bought at. 

We give elsewhere some of the arguments urged for 
and against the proposed plans, and alsc the text of 
Mr. Pierce’s plan, to which we especially would call at¬ 
tention. Like that of Mr. Bockus, it implies the with¬ 
drawal of the re-issued greenbacks, although these are 
not named in the bill,—the issue being regarded by Mr. 
Pierce as only a temporary measure. 

Plan No. 1. 

1. Stop at once the re-issue of any more greenbacks. 
Withdraw the notes already issued,—fourteen millions 
of them,—by selling as many bonds as were bought for 
temporary purposes early in the panic, and the balance 
by sales of gold. As soon as they are all once more in 
hand, destroy the whole forty-tour millions in such a 
manner that no one can ever “un-cancel” them again. 

2. Prevent the banks from assisting speculation in 
gold by forbidding them to loan one kind of money on 
another; and, to make the interdict effectual, prohibit 
them from counting specie in their reserve, until they 
are willing to use it in payment of their circulation and 
deposits. 

3. Whenever the combined action of the two meas¬ 
ures specified above has brought gold to par, or within 
a fraction of it, replace twenty-five or thirty millions of 
the outstanding legal-tender notes (the legitimate three 
hundred and fifty-six millions) with gold, and destroy 
the replaced notes. Continue such substitution steadi¬ 
ly, although, of course, on a smaller scale, as fast as 
the surplus revenue will permit, until the promises of 
the United States are as securely interchangeable with 
gold as those of the Bank of England. 





















THE FINANCIAL RECORD. 


4 


Arguments for it. 1. The Ee-issde. 

Secretary Richardson's re-issue of the cancelled green¬ 
backs unsettles and almost paralyzes mercantile opera¬ 
tions which require time for their completion, because 
no one can tell at what moment it may be stopped, or 
how far it may be carried. Legitimate business dis¬ 
trusts it, and refuses to be deceived by the semblance 
of prosperity which it has momentarily produced. The 
whole of the over-issue has passed into the banks of a single 
city, where it remains as an unused surplus, inviting specula¬ 
tion, and certain, if it be left unredeemed, to raise the 
cost of living, and reverse the balance of trade. The 
over-issue thus far is $25,687,800. The New York 
banks show an excess in reserve of $27,693,275 against 
$5,295,700 at the corresponding date last year. The 
National Board of Trade, expressing the deliberate con¬ 
victions of the best merchants of the land, has con¬ 
demned the Secretary’s action in the clearest terms, 
and demanded an immediate change. 

Mr. Richardson himself does not feel assured of the 
legality of his conduct. How could he? The Act of 
Congress which directed Mr. McCulloch to withdraw 
the greenbacks specified that they should be “retired 
and cancelled.” Can language be stronger than this ? 
And where, in all our Legislation, is a word to be found 
which even by implication sanctions their re-issue? 
After Mr. Boutwell’s emission of some five million notes 
in October, 1872, the Finance Committee of the Senate 
were instructed to “inquire whether the Secretary of 
the Treasury had the power under existing law, to 
issue greenbacks in lieu of the $44,000,000.” The Com¬ 
mittee gave the matter most careful consideration, heard 
all the Secretary’s arguments, and decided against him, 
reporting the following resolution by a vote of five to 
two: “ Resolved, That, in the opinion of the Senate, 

the Secretary of the Treasury hasuot the power, under 
existing law, to issue United States notes for any por¬ 
tion of the $44,000,000 of United States notes retired 
and cancelled under the Act approved April 12, 1866.” 
Mr. Richardson’s present emission is thus a slap in the 
face of the Senate, as direct as it can be given. 

Yet, if ever a measure required that its lawfulness should be 
unquestionable, it is the making of a forced loan, the confisca¬ 
tion of a part of every dollar tliat belongs to every man. 

2. The Bank Reserve of Gold. 

The protection of the currency combines with the se¬ 
curity of the public to require that specie shall be exclud 
edfrom the bank reserve until it can be restored to cir¬ 
culation. Resumption is,of course, the true remedy for 
this, as well as for all the other monetary evils that we 
endure. Failing resumption, however, Congress must 
be called upon to remove the evil by legislation, which 
will need to be not express, but explicit. Nothing 
should be left to the patriotism or even to the con 
science of bank-officers, many of whom, at present, 
commit constructive perjury on every return day, by 
swearing that the specie in their vaults belongs to their 
reserve; when it is really, for the most part, the proper¬ 
ty of their customers, and only in their hands as col¬ 
lateral for loans. ... 

So the New York banks, before the panic came 
upon them, always loaned upon gold at any rate they 
could get, and put as much of it as they could lay 
their hands on, into their reserve. They might as well 
have stuffed it with bales of cotton on which they had 
made advances, as with coin. This practice indeed so 
seriously impairs the usefulness of the New York bank 
reserve, that no dependence can be placed upon that 
famous bulwark in any real emergency. At the moment 
when we most need every dollar, we make the discov¬ 
ery that a large proportion of the legal tenders we have 
been relying upon is literally useless; that it is mer¬ 
chandise, not money, belonging mainly to other peo¬ 
ple, and countable in the reserve only by a flight of 
fancy. The more conservative of the New York banks 
appear to have become in some degree conscious of the 
fact that gold, while it commands a premium, is not and can¬ 
not be money. The governing committee of the Clearing 
House, in their report on the 12th of November, re¬ 
commended that no bank be allowed to hold less than 
three fifths of its reserve in greenbacks.— Resumption 
and How to Accomplish It .— C. E. Bockus. 

Plan No. 2.—Some Objections. 

[From a Boston Merchant in Italy.] 

The fundamental notion, involved in Mr. Sumner’s 
plan, that paper can be made to act the two parts of 
circulation and investment, is a fallacy. If it is good 
as an investment it will not circulate, and even if it be 
but a poor investment it is thereby injured as currency. 

As it continues to breed while kept in the desk or 
the pocket, more of it is so kept lying idle (quite inde¬ 
pendently of hoarding), than there would be of a cur¬ 
rency which could not be made to breed without part¬ 
ing with it, and so it causes a constant demand for more 
issues in order to do the work of transfers. An ideal 
currency is one which runs the fastest and does the 
most work thoroughly as it goes. It should be per¬ 
fectly safe, easily convertible, at par, into the cur¬ 
rencies of other lands and offering the least possible 
temptation to those persons who might; from any cause, 
be disposed to check the movement. 


Coin can be used as currency and exchanged for se¬ 
curities or be sold as merchandise at a profit or a loss, 
but it cannot be made to do double duty, and I fancy 
the same rule holds in regard to paper. As contraction 
must come, it should be so contrived that all men may 
be able to form some judgment as to its progress and 
then prepare themselves for its effects. Not left to be 
regulated by the timidity and stupidity of one class, 
the audacious selfishness of another, and the struggles 
of competing banks, all operating in secret. “Elastici¬ 
ty” in the currency is all very well, but we do not want 
one which might act like a spiral spring pressed by un¬ 
seen forces. The idea that the benefits of economy can 
be secured, while indulging in the luxury of extrava¬ 
gance, seems to me a very unwise one, and some plans, 
so far from easing the process of resumption, appear to 
be fitted to increase the suffering. Resumption in¬ 
volves contraction ; contraction means pinching, and 
pinching cannot be made easy, whether applied at the 
toe or the heel. 

I have seen mention of a plan of Mr. I S. Ropes, which 
seemed to avoid most of these difficulties; though that 
would give us two currencies of different values, for a 
time. Why is not that brought forward ? s. h. p. 

Plan No. 4. Mr. Pierce’s Bill. 

* 

(1.) That the Secretary of the Treasury shall cause 
to be prepared immediately two hundred million dol¬ 
lars of legal tender notes, of the usual denominations 
and in the usual proportions, payable in gold coin at 
the sub treasury of the United States in New York, in 
monthly installments of five million dollars each, such 
payment beginning on the first day of January, eight¬ 
een hundred and seventy five ; and the date of such 
payment shall be conspicuously stamped in every note 
so issued. Each monthly installment of the said new 
legal tender notes, shall be offered at public sale to the 
highest bidder, in exchange for existing legal tender 
notes, in the order of its date of payment, and ten mil¬ 
lion dollars of the said notes shall be issued in every 
calendar month, commencing as soon as the notes can 
be prepared, and continuing so long as any premium 
above par can be obtained for the same. When a pre¬ 
mium can no longer be obtained, the said notes shall, 
after a delay of thirty days, be issued at par to all ap¬ 
plicants in the order of their application, but the obli¬ 
gation to record and observe such order of application 
shall not extend to more than ten million dollars in the 
whole before again offering the notes to public compe¬ 
tition, and all notes received in exchange for said new 
issues of notes shall be immediately withdrawn from 
firculation, and cancelled. 

(2.) That the Secretary of the Treasury, in connec¬ 
tion with the Comptroller of the Currency, shall estab¬ 
lish forthwith, in the city of New York, a bureau of 
redemption, at which all circulating notes of national 
banks shall be redeemed, on presentation, in lawful 
money of the United States : Provided, nevertheless, That 
whenever, in the opinion of the Secretary of the Treas¬ 
ury, the cash balance in the Treasury shall not be suf¬ 
ficient to render the continuance of such redemption 
expedient, such redemption may be temporarily discon¬ 
tinued. And such national bauk-notes, when redeem¬ 
ed, shall be promptly assorted, and their amount charg¬ 
ed to the respective banks by which they were issued, 
and weekly notice shall be given to such banks to re¬ 
deem the same. And whenever such banks shall fail 
to redeem such notes within thirty days of the date 
when notice is mailed in New York, it shall be lawful 
for the Comptroller of the Currency to sell a sufficient 
amount of the bonds held for account of such banks, 
and to make good their deficit at the bureau of redemp¬ 
tion. And all notes thus left unredeemed shall be 
forthwith withdrawn from circulation, and cancelled. 

(3.) That from and after the passage of this act all 
purchases of bonds by the United States Treasury 
shall cease. 

THE ARGUMENT FOR IT. 

BT J. M. FORBES. 

Mr. Pierce’s plan is more gradual than any other 
which has been proposed yet, and when once fairly 
carried into effect, will be far more certain. It provides 
that at the rate of three to five millions a month, the 
government shall exchange, for existing greenbacks 
new greenbacks payable specifically in gold in two 
years, and on given days. If three millions be adopted 
it will be two years before the first dollar is paid iu 
coin, and it will take about eight years to pay off in 
coin the first two hundred millions of greenbacks, by 
which time it is believed that the growth of the coun¬ 
try and its wealth will enable the remaining greenbacks 
to remain out as currency, on a par with, and also grad¬ 
ually redeemable in specie. 

Once get two hundred millions of gold-geenbacks in 
circulation,and no power on earth can prevent the nation 
which paid gold interest during the war, from paying 
the gold notes as they manure. If the surplus revenues 
do not supply funds, it will be easy when the nation is 
on the sure road to resumption, to fund the deb tin bonds 
at a lower rate than we are now borrowing money at. 

I favor this plan, but I care not what plan is adopted 
if it only leads surely and gradually to resumption. 


Humors of Finance. 

During the great panic, when the pressure was the 
hardest, a committee of merchants and bank directors 
called upon a hard headed old merchant for counsel. 
Waiting gravely until they had set forth the existing 
curses, and asked his views about the remedy, he at 
last responded without a change of his imperturbable 
countenance, “Yes, gentleman, I can suggest a remedy 
which you may, if you please, report to the public. 
We have been spending too much money. Let us pull 
up short, and every man and boy, instead of buying 
coats andtrowsers, go to the tailor’s, and lay in a stock 
of odds and ends of cloth, for seat pieces and elbow and 
knee patches for a year or two.” The committee, who 
were expecting grand financial plans of relief, subsided. 

A Theory and the Proof. 

The inflationists in the West and South complain 
that there is not currency enough in the country- 
Those who oppose further issues of irredeemable mon» 
ey hold that such issues would not reach the West and 
South, but would be quickly concentrated at the finan¬ 
cial centers. 

On the 15th of February, 1873, the outstanding green¬ 
backs amounted to $356,000,000, of which the banks in 
the three cities of New York, Boston, and Philadelphia, 
held $63, 797,982. On the 16th of February, 1874, the 
greenbacks were $381,327,327, of which the same banks 
held $87,228,654. 

The currency had been inflated to the amount of 
$25,327,327, and three cities had absorbed the whole 
increase with the exception of $1,896,645. By how 
much had the West and South been benefited by the 
inflation ? s. 

An Inconvertible Currency Raises the 
Rate of Interest. 

Increase of currency really affects the rate of interest, but 
in the contrary way to that which is generally supposed, 
by raising, not by lowering it. 

The reverse will happen as the effect of calling in or 
diminishing in quantity a depreciated currency. The 
money in the hands of lenders, in common with all 
other money, will be enhanced in value ; that is, there 
will be a greater amount of real capital seeking bor¬ 
rowers; while the real capital wanted by borrowers 
will be only the same as before, and the money- 
amount less. The rate of interest, therefore, will 
tend to fall.— John Stuart Mill. 

Daniel Webster on a Paper Currency. 

The great Massachusetts Statesman, Daniel Web¬ 
ster, said, many years ago : 

A disordered currency is one of the greatest of politi 
cal evils. It undermines the virtues necessary for the 
support of the social system, and encourages propensi¬ 
ties destructive of its happiness. It wars against in¬ 
dustry, frugality, and economy; and it fosters the evil 
spirits of extravagance and speculation. Of all the con¬ 
trivances for cheating the laboring classes of mankind none has 
been more effectual than that which deludes them with paper 
money. This is the mosteffectual of inventions to fertil¬ 
ize the rich man’s field by the sweat of the poor man s 
brow. Ordinary tyranny, oppression, excessive taxa¬ 
tion, these bear lightly on the happiness of the mass of 
the community compared with a fraudulent cunency and 
the robberies committed by a depreciated paper. Our own 
history has recorded for our instruction enough, and 
more than enough, of the demoralizing tendency, the 
injustice, and the intolerable oppression on the virtu¬ 
ous and well-disposed of a degraded paper currency 
authorized by law or in any way countenanced by gov¬ 
ernment. 

The date of our last number, “Thursday, Feb. 14,” 
is a very good example of the disturbing effect of a 
depreciated currency. Time, as we all know, is mon¬ 
ey; and our printer acting under that knowledge, and 
supposing that the 12th of the month had a gold value, 
actually added the gold premium to Thursday and 
thus pushed it forward to Saturday. It was a natural 
mistake, like that of the shopkeeper who “added up 
the year of our Lord among the pounds ;” but we 
shall not let it happen again. Inflation in the curren¬ 
cy is bad enough, but inflation in the almanac is quite 
intolerable. 

The Financial Record is published by the Finance De¬ 
partment of the American Social Science Association, at 
their offices in New York and Boston. All cowuunlcationi 
respecting it may be addressed to the Secretary of the Asso¬ 
ciation, F. B. Sanborn, No. 5 Pemberton Square, (Room 21 , 
Boston; and all exchange papers, public documents, etc.,mav 
be forwarded to the same address. 



















FINANCIAL RECORD. 

“ WE NEED ONE THING BESIDES MORE MONEY, AND THAT IS BETTER MONEY ."-Senator Zcich. Chandler. 


VOL. I. 


THURSDAY, FEBRUARY 26, 1874. 


NO. 4. 


The Financial Record will be published weekly three 
mouths, and may be continued beyond that period It will 
be, as Its name indicates, a record of facts and opinions on 
the questions of National Finance w T hich are now so impor¬ 
tant to the American people; and all persons,editors or others, 
to whom it is sent, are invited to use it freely, and to copy from 
it without hesitation if they see fit. It will be sent free of 
postage, to all persons who will remit 60 cents to the publishers 
at No 5 Pemberton Square, Bo>ton. All editors who may re¬ 
ceive it are invited to send their papers in exchange. 


The Spirit of Congress. 

On Friday last the Senate reconsidered its vote of the 
day before, adopting the motion of Mr. Cooper, which 
was a substitute resolve, instructing the Finance Com¬ 
mittee to report a bill for converting greenbacks into 
coin or bonds, and for free banking. The debate was 
rambling and without new ideas. On the same day the 
Senate, (28 to 25), adopted Mr. Merrimon’s motion di¬ 
recting the committee to report a bill increasing the na¬ 
tional bank circulation to $400,000,000; and then ad¬ 
journed without taking a vote on the resolution so 
amended. On Tuesday the subject was resumed, and 
Mr. Schurz made a brilliant speech against inflation in 
any form. He showed that the currency must be in¬ 
creased, if at all, by buying bonds in New York. The 
West and South could only get the money by offering 
goods for it; the idea that new issues could be kept out 
of the old channels, was “a dangerous and childish delu¬ 
sion.’' Irredeemable money was not the people’s, but 
the speculators’ money. Inflation would depress the 
agricultural interests of the West and South still fur¬ 
ther. Free banking would only establish more firmly 
the grasp of the East upon the West and South; but he 
would not oppose it if coupled with practical redemp¬ 
tion. Our credit in foreign markets is not equal to that 
of European countries because it is feared we shall in¬ 
flate the currency. Mr. Schurz maintained that the 
chief injury wrought by inflation would fall on the 
poor, and predicted that those who expect to ride into 
power on inflation theories would fail, for the inflation 
bubble would burst before 1876. To this Senator Mor¬ 
ton, at whom the remark was aimed, replied by a sneer 
at Mr. Schurz, as not comprehending the country in 
which he lives. “Many of the theories of the old world 
do not apply to us. The greenback currency is the best 
the world ever saw,’’ etc. On Wednesday the debate 
consisted mainly of personal explanations between Sen¬ 
ators Morton and Schurz. Mr. Sherman, however, 
made an earnest appeal to the Senate against more pa¬ 
per money. Both parties are pledged not to lead us a 
step further from specie payments, and that inflation 
will surely do. Only stand still and prevent inflation, 
and one step would be gained. No vote was taken on 
the resolution, and to-day (Thursday) the debate was 
adjourned until Tuesday next in consequence of the 
illness of several Senators. 

The House said and did” nothing worthy notice, on 
the currency question. 

How the Senate Stands. 

Several votes taken in the Senate give indications 
(by no means exact) of the views of members. A 
correspondent of the New York Tribune has conversed 
with most of the Senators, and from his letter we make 
up a statement of the Senate position on the general 
question of inflation. Yet there may be some counted 
as inflationists who will not vote for every measure of 
expansion; while one or two set down as opponents of 
inflation, may favor some pet project which they re¬ 
fuse to look upon as tending in that direction. We 
adopt the statement of the Tribune correspondent with 
one exception, Senator Gilbert, whose votes have been 
steadily against inflation. Democrats in Italics. 

For inflation. —Alcorn, Allison, Bogy, Borpinan. Brown low, 
Cameron, Carpenter, Clayton, Conover, Dennis, Dorsey, Ferry 
iMicb.), Go/djlncaite, Gordon, Harvey, Hitchcock, Ingalls, 
Johnston, Lewis, Logan. McCreery, Merrimon, Mitchell, Mor¬ 
ton, Norwood, Oglesby, Patterson, "Pease, Pratt, Ramsey, Ran¬ 
som, Robertson, Spencer, Sprague, Tipton, West, Windom and 
Wright—88. 

Against inflation.— Anthony, Bayard. Boutwell, Bucking¬ 
ham, Chandler, Conkllng, Cooper, Cragin, Davis, Edmunds, 
Fenton, Ferry (Ct.), Flanagan, Frelinghuvsen, Gilbert, Hager, 
Hamilton (Md.), Hamilton (Tex.), Hamlin, Howe, Jones, Kelley, 


Morrill (Me.), Morrill (Vt ), Sargent, Saulsbury, Schurz, Scott, 
Sherman, Stevenson, Stewart, Stockton, Sumner, Thurman and 
Wadleigh—35. 

For inflation, 27 Republicans and 11 of the opposition; 
against it, 23 Republicans and 12 opposition. By sec¬ 
tions the vote is: New England, 1 for inflation 11 op¬ 
posed; Middle States, (N. Y., N. J., Penn., Del., Md. 
and Ohio), 2 for inflation 10 opposed; South, (Va., 
W. Va., N. C., S. C., Ga., Fla., Ala., La., Miss., Tex., 
Tenn., Ky., Ark.), 19 for inflation 6 opposed (one va¬ 
cancy) ; Northwest, (Ind., Ill., Mich., Iowa, Wis., 
Minn., Kan., Neb., Mo.), 15 for inflation 3 opposed ; 
Pacific States, (Cal., Nev. and Ore.), 1 for inflation 5 
opposed. 


The Spirit of the Press. 

Our country is governed quite as much by newspa¬ 
pers as by Congress, and we shall therefore, sometimes 
append to the condensed record of Congressional pro¬ 
ceedings, some of the notable utterances of the press 
in various parts of the country. We find this para¬ 
graph in the Cincinnati Gazette ,— 

A melancholy sight it is to see potent, grave, and 
reverend Senators laboring on a bill to equalize the dis¬ 
semination of money over the country. It is like an 
attempt to raise one part of the ocean by baling from anoth¬ 
er part into it. When Congress can make an equal dis¬ 
tribution of capital and its earnings, then money will 
make a similar distribution of itself, without any 
enactment. But the creation of paper money, no mat 
ter how its local points of issue may be placed, will 
only increase the unequal distribution of capital. 
There is nothing to prevent the paper money emitted 
in the East from coming to the West, save that the in¬ 
ducements are stronger at the East. There is nothing 
to prevent paper money emitted at the West from 
going to the East, if stronger inducements are offered 
there. The inducements, in one way or another, are 
stronger there, although interest is higher in the West. 
The notion that to reduce the paper money privilege 
in the East, and correspondingly increase it in the 
West, will equalize the distribution of money or capi¬ 
tal is of simplest verdure. 

The Rochester (N, Y.) Democrat, (which is a Repub¬ 
lican paper,) says,— 

If the West would unite with the East, in the effort 
to obtain a specie basis, and then rely upon the law of 
supply and demand, as the future regulator of the cur¬ 
rency, all would be well. The mistake of the infla¬ 
tionists is in putting the cart before the horse. They 
demand that more greenbacks and free banking shall 
precede the resumption of specie payments. Such an ar¬ 
rangement is sure to indefinitely postpone resumption. 
It is a reversal of the natural and logical method of 
proceeding; and it is singular that our pretentious 
statesmen do not see this. We believe, indeed, that 
the clear-sighted financiers, of all sections, who are un¬ 
disturbed by visions of speculation and buoyant values, 
do see this. 

The Chicago Times, the leading Democratic paper of 
the Northwest, says,— 

It is not a “redundant and abundant” currency that 
has stimulated the growth of the great West. Our 
growth has been in spite of, and not in consequence of, 
that redundancy which is advertised daily by the gold 
quotations. That redundancy has increased the cost 
of producing grain and cotton, and of nearly every arti¬ 
cle which the farmer and the planter have to buy, far 
beyond the gold premium, while it has not increased 
the prices of wheat, cotton, and other exportables, be¬ 
cause those prices are regulated by the foreign demand. 
Therefore the idea so prevalent just now that the West 
and South need more currency, is an utterly mistaken 
one. 

The Times admits that panics have occurred under 
all currency systems, and are liable to occur under 
any that may exist. But it is of opinion that a system 
which sets prices to dancing every now and then, which 
begets aud fosters a spirit of speculation, which legalizes 
repudiation, and which undermines the sense of public and j 
private honor, is a system under which panics are likely i 
to occur pretty frequently. It is of opinion that there 
is no currency so safe and wholesome as good, honest j 
coin, with, perhaps, a little government paper, not ex¬ 
ceeding $5 per capita, convertible into coin on demand 
at any subtreasury or government depository. With 
such a currency, prices would be comparatively stable, 
the gold gambling rooms would be closed, and farmers , 
and planters would get a fair return for their export¬ 
able crops. 

The Chicago Tribune is equally in favor of a return to I 


specie payment. Commenting upon Mr. Forbes’ state¬ 
ment before the Congressional Committee, the Tribune 
says,— 

The principal victims of a fluctuating currency are, 
among clashes, the laborer; and among sections, the 
South and West. The laborer is the “residuary lega¬ 
tee of all the blunders of our gambling system.” Hi9 
class is the largest creditor, and is therefore exposed to 
most loss by depreciation in the currency. He cannot 
speculate. “Prices fall fir him latest while they rise 
soonest.” And Mr. Forbes might have added that wa¬ 
ges fall for him soonest while they rise latest. The 
steadier an industry is, the more it suffers from an unsteady 
currency. Agriculture is the feature of the West and 
the South. Its products are sold on a gold basis, for 
the price at Liverpool regulates the price at New York. 
The articles the South and West get in exchange are 
paid for in prices based on paper, which are from 20 to 
30 per cent higher than the paper equivalent of a gold 
price. 

A New Financial Plan. 

BV C. F. ADAMS, JR. 

A new scheme for bringing about resumption was 
put forward by Mr. Charles Francis Adams, Jr., in a lec¬ 
ture in Boston, February 25, bearing a strong resem¬ 
blance to that of Hon. Henry L.Pierce, but differing from 
it in some important particulars. The leading idea is like 
Mr. Pierce’s, a substitution of redeemable for irredeem¬ 
able Treasury notes; but Mr. Adams proposes that a 
certain quantity of the new currency, to be sold 
monthly for greenbacks to the highest bidder, shall be 
redeemable in gold, not after two years, but instantly. 
He would allow the legal tender Character of the ex¬ 
isting currency to be retained, and would make the new 
notes legal tender for all debts except those to and 
from the Treasury. In order to afford security for re¬ 
demption to the holders of these notes, he would em¬ 
power the Secretary of the Treasury to sell bonds for 
gold, whenever the balance of coin was seriously threat¬ 
ened. 

The advantages claimed for this plan are : 

1. That the greatest possible contraction under it 
would only he the amount of the premium paid for new 
notes ; that when the premium was reduced to nothing, 
contraction would cease and expansion would begin, 
and would go to exactly the point of safety. 

2. That it would drive the whole coin reserve to the 
Treasury, where it would be safest, most accessible, and 
most easily available for all commercial purposes. 

3. That it would be safe to issue three, four or five 
times the value of coin in the Treasury in gold notes, 
the holder being protected by the pledge that bonds 
should be sold for gold in case the actual supply of 
Treasury gold were giving out. 

4. That thus the necessity for accumulating a stock 
of gold is obviated; that there is no disturbance of the 
existing status of the greenbacks left in circulation ; 
and that the plan opens a way for the settlement of 
coin dues to the government, indirectly, in paper,—the 
creditor of the government not being forced to take 
paper, however. 

Mr. Adams enforced his views with some apt illus 
trations, and answered some hypothetical objections. 
We make a few extracts,— 

The argument for what I have termed a “recoinage” 
of our paper is economical. It looks to having the 
new currency ready in any quantity to at once replace 
the old. If the new currency is thus ready to the 
amount, including gold, of $300,000,000, or $400,000,000, 
then, instead of being a measure of contraction, the 
process of recoinage is, if the arguments advanced in 
favor of an expansion of the currency are correct —if 
it be true, as is so often asserted by those who ought 
to know, that the country needs more currency,—then 
the recoinage is a scheme of vast inflation, tar wider 
and broader than Mr. Morton, or Mr. Logan, or Mr. 
Ferry have dared to suggest. It looks to an inflation 
of our paper money in place of the few tens of millions 
of greenbacks which would have been withdrawn when 
those touched par, not only by all the specie in the coun¬ 
try but by a volume of fresh paper several times the 



























THE FINANCIAL RECORD. 


8 


amount of all the gold in the Treasury. It is true we 
do not believe that this fresh paper would either go 
out or stay out, for we do not believe the country wants 
it, and it would not budge an inch unless the country 
did want it. But this is the very question at issue 
between us and the inflationists. They say the coun¬ 
try does want it. “Very well,” we reply. “If you are 
right, and it does want it, there it is, come and take it. ” 
We thus challenge them to the one decisive test of 
their theory. We simply reduce the outstanding, irre¬ 
deemable, debased money by a few millions, and we 
open the portals of a treasury filled with redeemable, 
good money, and we say, “Let it flow out! We have 
faith in our science; we believe in our principles; we 
know that if it is wanted every dollar will flow out, 
and the currency will expand by the entire amount; 
if it is not wanted, not a dollar will move, or it will 
move out only to immediately return.” We thus have 
faith in our own assertion, and we prove it by our acts. 
Have our opponents equal faith in theirs ? If they 
have they would accept the test. We all know they 
have not. They cry out, and weary us with the reit¬ 
eration, “The country is languishing for more money;” 
but they always add, “it must be money in forced cir¬ 
culation, the constable must be behind every dollar.” 


The Workingmen and the Currency. 

In a speech delivered at Freeport, Ill., on the 6th 
inst., Mr. Willard C. Flagg, the head of the Farmer’s 
Movement in Illinois, said of our present irredeemable 
and depreciated currency: 

“Schemes of finance that depreciate currency, and 
leave it without any certain value, are profitable to 
men of capital and to shrewd speculators, or rather 
gamblers in stocks; but they are a heavy (ax upon that 
portion of the population which must earn its living painfully 
by manual labor. The farmers, the mechanics and the 
laborers of this country, should have specie payments, a 
fixed and unwavering currency, and less taxes on arti¬ 
cles of necessity. A depreciated currency is not felt 
nearly so much by the manufacturers, whose products 
are made and sold under the same currency.” 

This is the opinion of an Illinois farmer who has 
studied finance on his fruit farm in “Egypt,” and now 
leads the councils of thousands of “Grangers.” But 
Wall Street teaches the same lesson also, and to the 
same effect is the New York Evening Post’s argument: 

The importance of the currency question lies in its 
bearing upon the masses of the community, and partic¬ 
ularly upon labor. The great majority of men have 
nothing to do with banks or banking; they know noth¬ 
ing of either and care little for either. The farmers, 
the mechanics, the laboring men, the small traders, who 
form the bulk of society, demand but one thing, which 
is “a fair day’s wages for a fair day’s work ” They 
want first of all, and all the time, that the token or 
commodity which is accepted as the symbol of services 
rendered and the order for services to be received, be 
as invariable as it can be made. Credit is to them an 
almost unknown quantity. Except for the briefest pe¬ 
riods of time, and in the directest vay, their transac¬ 
tions are all for cash, and the one thing essential for 
them, is that such cash should be precisely what it purports 
to be, of the same value when they part with it that it had when 
it was received. This we may say indeed, is the vital 
breath, the life-blood, the very ground and essence of 
all honest and eflicient industry. Now, in the precious 
metals they have such an equivalent. It is a mark, not 
absolutely without fluctuation, but less liable to fluctu¬ 
ation than any other medium that has yet been discov¬ 
ered. 

With this handy, stable, indestructible, and effective 
instrument in use, why should the people be required 
to dispense with it for a substitute which is certainly no 
better, and we think much worse? Paper, for the 
small sums they handle, is not more convenient; it is 
not near so economical, while it is confessedly accom¬ 
panied by very great hazards. Why should they be asked 
or forced, in order to accommodate the exchangers, to adopt 
what is for them a poorer machine in place of one that is 
admirably fitted to their purposes and almost perfect? 

Senator Bayard, in his little State of Delaware, has 
come to the same conclusion, and uses similar language. 
He said in the Senate a few weeks ago: 

We have, in round numbers, $770,000,000 of paper 
money, the value of which is continually fluctuating 
from day to day. When it is considered that a change 
of 1 per cent, on this' vast sum causes a loss somewhere 
of $7,700,000, and that thus each such fluctuation caus¬ 
es tilis sum to change hands, the dangers of the contin¬ 
uance of such a system will be better appreciated. 

Who loses this ? Not the merchant or the trader, 
for he will readily and willingly raise the prices of his 
commodities to correspond with the advance in the 
gold premium, and the advance, like all increases of 
cost , falls upon the consumer, and chief y upon the poorer con¬ 
sumer, who can only buy in small amounts from day to day, 
and is unable to make new contracts for hts labor, which is all 
he has to exchange, and the price of which cannot be rap¬ 


idly adjusted to meet the shiftings in value of such pa¬ 
per money. Indeed the loss to the poor consumer is 
far greater than the original advance in the premium 
upon gold. 

When from any cause, artificial or otherwise, arising 
from the natural exigencies of trade, or the raid of 
some of the brood of those gigantic speculators whom 
the war and paper money have combined to create in 
this country, the premium upon gold is suddenly ad¬ 
vanced, the importer of merchandise raises the price of 
his goods to protect himself, the jobber to whom he sells 
does the same thing in his turn, and so on each succes¬ 
sive hand pursues the system until from New York to 
Colorado at last 10 per cent, is added to the cost, even¬ 
tually to be paid by the consumer, although the first 
fluctuation was but 1 per cent. 


The Forty-Four Million “Keserve.” 

The Milwaukee Wisconsin, whose editor has been 
spending some time in Washington says : 

Nothing will be done at this session further than to 
legalize the $44,000,000 of the so called legal tender re 
serve, as provided for in the bill of Mr. Dawes. $25,- 
300,000 of that reserve is already in circulation ; leaving 
$18,700,000 more to be used at the pleasure of the 
government. Some of the strongest members of the 
House are justly opposed to that legalization, as they 
properly insist that in a Kepublican government offi¬ 
cials have no right to venture upon so dangerous an ex¬ 
periment as to do an act which requires to be legalized 
by Congress. Among these members, the most prom¬ 
inent, clear-headed and just, is General Hawley, of 
Connecticut, who, we do not hesitate to say, is one of 
the growing men of the nation. . . . \ The longer the 
question is discussed, and the more the Representatives 
have opportunity to confer with their constituents, they 
find that the great mass of thinking men of all parties 
are opposed to any further inflation of the currency. 
When inflation was first proposed, in December, some 
ol the Wisconsin delegation were inclined to support it; 
but the more it has been examined in all its bearings 
the deeper do they find the conviction growing against 
it. By “inflation,” is meant at Washington any furth¬ 
er issue than the $44,000,000 of legal-tender reserve. 

It is inflation, however, and a very objectionable 
form of it, to reissue this miscalled “reserve.” Upon 
this the N. Y. Evening Post says : 

The great and vital subject which ought to engage 
the attention of Congress is the issue of the “$44,000,- 
000 reserve.” Our merchants cannot buy goods or sell 
goods—cannot in fact transact any business with safe¬ 
ty, because they do not know from day to day what the amount 
of legal-tender notes in circidation is to be. The evil is an 
open one, and every day it is permitted to remain the 
injury inflicted by it becomes greater and more widely 
diffused. Will not Congress listen to the demand of 
thoughtful men ? That demand is for the withdrawal 
of every dollar of the “reserve” which has already been 
issued, and the unequivocal decision that the full amount 
of legal-tender notes in circulation shall never exceed 
$366,000,000. 

Upon this subject Senator Schurz has spoken with 
much ability, showing to what results the power of al¬ 
tering the currency leads. He says : 

FORCED LOANS NO LONGER NECESSARY. 

I have already shown, and I suppose nobody will 
question it, that the use of inconvertible legal-tender 
paper money was resorted to at the beginning of the 
war under the pressure of extreme danger and neces¬ 
sity. The very life of the Republic was in jeopardy ; 
and, overruling our scruples, that extremity forced us 
to use what expedients we had at our disposal. That 
was the only justification we had before our own con¬ 
sciences and before the world for the issue of an incon¬ 
vertible paper currency To day neither a foreign 
war nor a domestic rebellion is at our gates. We are 
in profound peace. Nor is there any other necessity of 
similar import pressing upon us. To be sure our reve¬ 
nues are falling short of our expenditures; but there 
are several honest means by which such a difficulty 
can be provided for—rigorous retrenchment, or a new 
loan in the ordinary way, or taxation. In all these re¬ 
spects there is absolutely not what you could call un¬ 
avoidable necessity for the issue of an addition to our 
irredeemable currency; and yet without such necessity 
we are urged to resort to a measure so extreme that 
only the direst necessity can justify it—the levying an¬ 
other forced loan, without interest, upon the people. 

What are the reasons given in favor of such extra¬ 
ordinary advice! Not even that a sudden and general 
financial thunder-storm must be neutralized ; for, I re¬ 
peat, that stage of the business, as much as there was of 
it, lies far behind us in our case. No ; the distinct pur¬ 
pose is, as Senators say, to make money easy ; to give a 
new impulse to enterprise; to revive prosperity. Now, 
I would ask gentlemen, have they considered what 
that means ? It means the inauguration of a system 
by which the Government of the United States is to 
exercise the power at its discretion, in order to produce 
’ a certain effect upon the business of the country, to is¬ 


sue any amount of irredeemable legal-tender paper 
money it pleases, which paper money by additional is¬ 
sues may—nay, certainly will—further depreciate; thus 
changing all current values in the country; in other 
words, a system which virtually will place all the private 
fortunes of the country at the sovereign mercy of the Federal 
Government. Do not say that the Executive alone will 
not be permitted to exercise such a tremendous and 
dangerous power. We will suppose Congress reserves 
it all to itself—is the danger less ? Do you think that 
the American people, calmly considering the matter, 
ever will or ever safely can intrust any branch of the 
Federal Government with so awful a discretion ? And 
such a system is inaugurated as soon as we admit that 
Congress may, without the most overwhelming neces¬ 
sity springing from immediate and extreme public 
danger, at its discretion, merely to exercise a certain 
influence upon the business of the country, issue what¬ 
ever amount of legal-tender currency it pleases. None 
but despotic governments have ever claimed such a 
power—virtually the power of debasing the coin of the 
realm, and even worse. It has never been resorted to 
without the most sweeping ruin and disaster; and I 
hope Congress will pause and consider well before rais¬ 
ing so monstrous a policy to the dignity of a system. 


Facts for Prairie Farmers. 

In 1860 we had neither greenbacks nor national bank 
bills, which are said to be such good things for the 
Western farmers ; and yet a bushel of prairie wheat 
would buy more imported sugar in 1860 than in 1874. 
The duty on sugar in 1860 was 24 per cent, and now it is 
40 per cent; but that difference will be allowed for in the 
calculation. The average price of good wheat in a large 
Western city, (say Chicago or Cincinnati), in 1860-1, was 
$1.10 per bushel, the price of good yellow, C. sugar, 
9 cents a pound. Therefore, one bushel of wheat in 
1860-1, fetching $1.10 in Chicago, would have bought 
12.2-9 pounds of best yellow C. sugar, at 9 cents per 
pound. But in February, 1874, the average price of 
sound wheat in Chicago is $1.25 per bushel, and the price 
of best yellow C. sugar is 12 cents per pound. Now, 
to make a fair comparison, we must first deduct 16 per 
cent from the duty in 1874 over that of 1860. The 
average specific duty in 1874 being 3 14 cents per 
pound, if we deduct 16 per cent it gives a fraction 
over 1-2 cent per pound. That is to say, if the duty on 
sugar were now what it was in 1860, the best yellow C. 
sugar could, and no doubt would, be sold at 11 12 cents 
instead of 12 cents a pound in Chicago. A bushel of 
wheat fetching $1 25 in Chicago buys, at 111-2 cents per 
pound for best yellow C. sugar, a fraction over 10 7-8 
pounds. Thus conclusively showing that, notwithstand¬ 
ing a rise of 15 cents per bushel for wheat in 1874 over 
I860, and putting sugar exactly on a par as to duty 
with what it was in 1860, the bushel of wheat fetches 
over a pound of sugar less in 1874 than 1860. 

Now, the simple question is why has the bushel of 
wheat lost its purchasing power in 1874 to the extent of 
12 per cent? Strange to say, and a remarkable co-in¬ 
cidence too, the gold premium is just about equal to the 
loss of the purchasing power of the wheat. But what 
is still more deplorable is that the cost of raising the 
wheat in 1873-4 was to the farmer, at least, 20 per cent 
more than in 1860-1. And why does it cost him more ? 
Simply because the inflation of the currency has raised 
every conceivable thing that has the ingredients of a 
substance in it which has to be liquidated in gold and 
not in paper. The leather we import, the wool, the 
thread, the silk, the glass, the jute, the hemp, the iron 
and steel,—in short, everything that has to be paid to 
Europe, Asia, Africa and Australia, and the duties col¬ 
lected on such imports—all have to be paid in gold, which 
is 12 to 15 percent better than our currency. Hence it 
follows that the cost of raising wheat is necessarily 
higher than it would otherwise be if these premiums 
could be saved. In short, the farmer simply pays a 
premium for all he buys, and only receives the actual 
value for his produce, minus the premium. 


Humors of Finance. 

There is a nice plan suggested by Dr. Bacon in the 
Christian Union for the benefit of those financial philos¬ 
ophers who, like Judge Campbell, of La Salle, Ill., 
maintain that Congress has power to inject any quanti¬ 
ty of value into anything whatever by a simple be-it- 
enacted. Dr. Bacon proposes that Congress pass a law 
declaring that the copper cent shall have the value of 
one dollar; that the nickel five-cent coin shall be worth 
five dollars; that the ten-cent silver coin shall be worth 
ten dollars; that the silver dollar shall be worth a 
hundred dollars, and so on. This scheme presents a 
double advantage. It would enable the inflationists to 
pay a hundred dollars of debt with one dollar in value, 
and it would remove their only serious objections to 
specie payments. Besides this, it would enable the 
government to pay off the public debt with wonderful 
ease and rapidity, and without the slightest taint of 
repudiation. Of course, if Congress can make a cop¬ 
per cent worth a dollar by simple statute, there can be 
nothing dishonorable in doing so, and paying off the 
debt in eent-dollars instead of hundred-cent dollars. 









































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CIRCULAR 1. 


American Social Science Association, 

• a 

5 Pemberton Square, (Room 21.) 

Boston, March 5, 1874. 

The Executive Committee of this Association, in announcing the Programme for its General Meeting in 1874, takes this occasion to explain 
briefly the origin of the Association, its aim and method of working. It was established eight years ago, having been organized in Boston at a pub¬ 
lic meeting, October 4, 1865, at which the late Gov. Andrew of Massachusetts presided, and has had for its Presidents, Prof. W. B. Rogers and Ds. 
Samuel Eliot of Boston, and George William Curtis of New York. Its members have varied in number from 150 to 600, and are now about 
200. Its object is to investigate and discuss all questions belonging to that new and broad domain of thought and practical activity known as Social 
Science; and its methods are, the holding of public meetings, the,formation of committees for special research, correspondence with all parts of the 
country, and the publication of information in various ways; the Financial Record being one of its vehicles. It comprises five Departments, in eith- 
er of which its members may enroll themselves, but which are managed by Committees appointed by the General Committee, which, in turn is elec¬ 
ted annually by the whole body of members. A copy of the Constitution accompanies this Circular. 

The publishers for the Association are Messrs. Hurd & Houghton, 8 Astor Place, N. Y., who will furnish all documents of which the supply is 
not exhausted. Nos. 1, 3 and 4 of the Journal, can no longer be supplied. Members are entitled to all the publications of the year for which their 
assessment of five dollars is paid. The office of the Association is in Boston, and its annual meetings are held there, but its General Meetings are 
held in other cities. Branch Associations exist in Philadelphia, St. Louis, and New Haven, and the formation of others is earnestly recommended. 
The present officers of the Association are the following,—the most distinguished among them, and one of the most active of our members, Prop. 
Agassiz, having died since the annual meeting in October,— 

President, GEORGE WILLIAM CURTIS, New York. 

Vice-Presidents : Samuel Eliot, Boston; H. C. Lea, Philadelphia; Theodore D. Woolsey, New Haven; J. W. Hoyt, Madison, Wit.; George 
Davidson, San Francisco; D. C. Gilman, Oakland, Cal.; William T. Harris, St. Louis, Mo.; D. A. Wells, Norwich, Conn. 

Secretary, F. B. SANBORN, 5 Pemberton Square, Boston, Mass. 

Treasurer, J. S. BLATCHFORD, 13 Exchange Street, Boston, Mass. 

Directors : * Prof. Louis Agassiz, Emory Washburn, Charles W. Eliot, Prof. Benjamin Peirce, Cambridge; S. G. Howe, T. C. Amory, C. C. 
Perkins, J. M. Barnard, R. M. Mason, S. A. Green, Roger Wolcott, Boston; Edward C. Guild, Waltham; E. C. Wines, New York; Charles I. Walker, 
Detroit, Mich.; Mrs. John E Lodge, Mrs. S. Parkman, Mrs. Caroline H. Dali, Mrs. Henry Whitman, Miss A. W. May, Miss Alice S. Hooper, Boston. 

The above-named persons with the Chairmen of the Five Departments, make up a Council or Executive Committee of 35 members which 

4 

meets in Boston, on the last Saturday of every month. The Department Committees are as follow*: 

DEPARTMENT OF EDUCATION. 

C- W. Eliot, LLD., President of Harvard College, Chairman; Miss A. W. May of Boston, Secretary. 

Members of the Committee. 

Prof. Benjamin Peirce, Prof. Child, Prof. J. M. Peirce, Cambridge; John D. Philbrick, Charles C. Perkins, Mrs. S. Parkman, Ephraim Hunt, 
James M. Barnard, Justin Winsor, Joseph White, Boston; Prof. Runkle, Prof. W. P. Atkinson and Prof. G. H. Howi*on, of the Institute of Technol¬ 
ogy, Boston; J. Elliot Cabot, Brookline, Mass.; W. C. Collar, Roxburg, Mass.; D. B. Hagar, Salem, Mass.; Miss A. E. Johnson, Framingham, Mass.; 
Elbridge Smith, Harrison Square, Mass.; C. O. Thompson, Worcester, Mass.; H. F. Harrington, New Bedford, Mass.; A. Q. Boyden, Bridgewater, Mass. 

DEPARTMENT OF HEALTH. 

Edward Wigglesworth, Jr. M. D., Boston, Chairman; D. F. Lincoln, M. D., Boston, Secretary. 

Members of the Committee. 

James M. Barnard, J. S. Blatchford, C. J. Blake, M. D., Edward Cowles, M. D., Norton Folsom, M. D., T. Sterry Hunt, LL.D., B. H. Fits, 
M. D., W. W. Moreland, M. D., O. F. Wadsworth, M. D., Arthur H. Nichols, M. D., Joseph Willard, H. I. Bowditch, M. D., Prof. G. F. H. Markoe, 
T. W. Fisher, M. D., J. J. Putnam, M. D., Boston. 

DEPARTMENT OF FINANCE. 

/ 

« 

Members of the Committee. 

D. A. Wells, Norwich, Ct., Chairman; John M. Forbes, Boston; Gamaliel Bradford, Boston; George Walker, New York. 

DEPARTMENT OF JURISPRUDENCE. 

Hon. John Wells, Boston, Chairman; J. B. Thayer, Boston, Secretary. 

Members of the Committee. 

Emory Washburn, LL.D., Prof. Torrey, LL,D., Cambridge, Mass.; F. V. Balch, George Putnam, Jr., Moorfleld Storey, D, E, Ware, O. W. 
Holmes, Jr., W. A. Field, Boston. 

DEPARTMENT OF SOCIAL ECONOMY. 

Members of the Committee. 

Prof. W. B. Rogers, Chairman; Dr. S. G. Howe, Mrs. S. Parkman, Mrs. Henry Whitman, Mr. John Ayres, Miss Lucy Ellis, Boston; 
Charles F. Coffin, Esq., Richmond, Ind.; Dr. Robert T. Davis, Fall River, Mass.; Charles L. Brace, Esq., New York; F. B. Sanborn, Concord, Mass.; 
Secretary. 


•Died December 14 , 1878 . 




FINANCIAL RECORD. 

“WE NEED ONE THING BESIDES MORE MONEY, AND THAT IS BETTER MONEY .”—Senator Each. Chandler. 


VOL. I. .. THURSDAY, MARCH 5, 1874. 


NO. 5. 


The Financial Record will bo published weekly three 
months, and may be continued beyond that period It will 
be, as its name indicates, a record of facts and opinions on 
the questions of National Finance which are now so impor¬ 
tant to the American people; and all persons,editors or others, 
to whom it is sent, are invited to use it freely, and to copy from 
it without hesitation if they see fit. It will be sent free of 
postage, to all persons who will remit 60 cents to the publishers 
at No. 5 Pemberton Square, Boston. All editors who may re¬ 
ceive it are invited to send their papers in exchange. 

The Spirit of Congress. 

Congress has had no spirit for the financial question 
the paat week. Two or three of the Senators who de¬ 
sire to 6peak on the subject, including Mr. Mo'rton, are 
ill, and until they recover and resume their seats it is 
not expected that the debate will be continued. The 
House has been wholly occupied with other matters. 
Meantime, until Mr. Morton is ready with his new 
speech, we may as well quote from his old ones. In 
the debate on the cancelled $44,000,000, now called a 
“reserve,” Senator Morton said (in 1868),— 

“The apprehension expressed by the Senator from 
Vermont, that if this amendment is not adopted the 
Secretary of the Treasury will have a right to reis¬ 
sue legal-tenders so as to make the whole amount $400,- 
000,000 again, I regard as without foundation. The law 
gave him authority to issue to the amount of $400,000,- 
000 without the reserve. When that amount was is¬ 
sued his authority was exhausted, and if it was afterwards 
contracted down to $360,000,000, or to any amount, 
he has no authority without new legislation to issue to the 
amount of $400,000,000. As the Secretary has no pow¬ 
er to expand the currency, it is not necessary for us to say 
one word on that subject.” 

Senator Sherman’s Opinions. 

[Speech in Senate February 25th, 1874.] 

This is the first time since the close of the war that 
any man has had the boldness and temerity to propose 
an inflation of the currency. I wish to call the atten¬ 
tion of Senators to this fact, that in the face of all the 
promises that have been made by political parties, in 
the face of promises made by the President of the Unit¬ 
ed States, made by Congress, made by the very Sena¬ 
tors who now are advocating this proposition, in the 
face of speeches without number made by these Sena¬ 
tors to the people of the United States and as Senators 
here, this is the first time since the close of the war 
when a deliberate proposition has been made to add to 
the irredeemable paper money of the country. I know 
that Senators forget and avoid this question. When 
we come to talk to them about infla ting the paper mon¬ 
ey,they all deny it. The Senator from Indiana [Mr. 
Morton] said yesterday he is in favor of specie pay¬ 
ments ; all of them say they are in favor of specie pay¬ 
ments ; and yet on this day, the 25th of February, 1874, 
nine years after the close of the war, they propose to 
add to the paper money of this country $46,000,000, 
without any plan of redemption, without any promise 
of redemption, without any hope of redemption. And 
this is all to relieve the country. Mr. President, this 
proposition shocks me so much that I can scarcely dis¬ 
cuss it. _ _ _- 

The “Reserve.” 

As the discussion on the question of legalizing the 
re-issue of currency from the forty-four millions of mis¬ 
called “reserve” will soon begin in both houses of Con¬ 
gress, we will give in a condensed form the points of 
argument on which the advocates of honest money 
and strict construction of the laws, mainly rely,— 

1. The issue is proved to be unnecessary. There is 
at this moment in the vaults of the New York banks 
a sum of more than $20,000,000 (greenbacks) above 
the legal bank reserve, that cannot be lent because no¬ 
body can use it profitably. The greenback excess 
above the legal maximum of $356,000,000 is now $26,- 
000,000. The $6,000,000 not accounted for in the 
New York banks is lying idle in Boston and Philadel¬ 
phia. This unusable money cannot get to the South 
and West, because these sections are already in debt 
to the commercial centers. 

2. It is inexpedient to legalize the issue. All these 
millions have been open to the demands of legitimate 
business, for the last six weeks at least, and they have 
been left untouched. If this amount should be made 
a part of the permanent circulation it would instantly 


tempt to speculation, and would certainly be used in 
questionable enterprises, to encourage and engage in 
which leads inevitably to financial and commercial 
disaster. 

3. It is dishonest. Increase the currency by ten, twen¬ 
ty or forty milhons, and the value of the whole is re¬ 
duced. The debts contracted by Southern and West¬ 
ern merchants in New York and Boston ought to be 
paid in as good currency, as the legal tender of the 
time when goods were bought. Deliberately to take 
a step that makes the legal-tender money less valua¬ 
ble is to defraud every creditor in the country, to im¬ 
pair the value of contracts, and to derange prices. 
Whether the debtor or the creditor class is the larger is 
not the question, and ought not to be considered. It is 
a matter of right and wrong. 

4. It is a dangerous precedent. If it is necessary to le- 
gafize the issue, it must be admitted that what has 
been done was illegal. It makes no difference whether 
this is the first or the fortieth time that the “reserve” 
has been drawn upon. Making the issue valid is to 
sanction by law an authority beyond the law, an au¬ 
tocratic exercise of power, hostile to the principles of 
liberty. Should the proposed act be passed it would 
empower the Secretary of the Treasury to raise and 
lower prices at will, to regulate the money market at 
his pleasure and even for his pecuniary profit, and to 
hold every business interest of the country at his mer¬ 
cy. In brief, it would sanction an act of usurpation, 
(however well intended) and would confer a power that 
cannot safely be trusted in any man’s hands. 

5. It is in violation of a pledge, not less solemn and 
binding because it was not expressed in plain and un¬ 
mistakable language. The promise was explicit that 
the issue should never exceed $400,000,000. Secretary 
McCullough was empowered to contract the currency, 
and in 1868 Congress suspended the act authorizing 
contraction. At that time, as the debate in the Senate 
shows, it was the understanding, based on the assur¬ 
ance of the committee reporting the bill, that not a 
dollar of the cancelled greenbacks could be re-issued. 
Senators Morton and Sherman, and the present Attor¬ 
ney-general joined in this understanding, and scouted 
the idea that the $44,000,000 could ever be put forth 
again. This was a promise to the country. Business 
accommodated itself to the.volume outstanding, and 
no thought of taking a backward step occurred to any¬ 
body until Secretary Richardson began to talk of can¬ 
celled greenbacks as a “reserve,” and issued a part of 
it in violation of law. It is true an opinion has been 
procured by the Secretary that he has acted legally, 
but opinions so obtained are not worth much as against 
the plain language of a law and the explanation of it 
when on its passage by the Senator having it in charge. 

6. It is unconstitutional. The clause making paper a 
legal tender can only be justified by a state of war. 
The Supreme Court sustained its validity only a9 an 
exercise of a war power. An increase of paper issues 
is an act exactly similar to an original issue, since it 
also impairs the value of debts and contracts. No 
necessity exists or can exist, while we are at peace, en¬ 
joying fair credit and with full power to raise money 
by taxation, for such an increase of paper issues ; and 
if the constitutionality of the proposed act should be 
questioned before the Supreme Court, it would probably 
be denied. 

The Spirit of the Press. 

The St. Louis Republican, the leading Democratic 
paper in Missouri, talks in this way : 

All, or nearly all, the banks and banking-houses of 
this city have more money on hand than they can con¬ 
veniently find u^e for, and are not only willing but 
anxious to accomodate reliable customers. And what 
is true of St. Louis is doubtless true of other leading 
commercial centers. The panic did not annihilate cap¬ 
ital, did not even seriously lessen it; it absorbed and 
locked it up for the time. The danger being over, cap¬ 


ital is again let loose and is now actually seeking in¬ 
vestment. There is money enough now afloat for all 
the legitimate demands of the country, and the surplus 
created by the prospective increase of currency will only 
tend to stimulate illegitimate demands. Values will be 
inflated far beyond their real dimensions, the mania 
for speculation will again be roused, and every depart¬ 
ment of industry and of business will be infected by the 
unwholesome atmosphere of a false prosperity. Then, 
after “going up like a rocket” for a few years, we shall 
begin to “come down like the stick”—and our fall will 
be aggravated and intensified by the foolish financial 
ballooning in which we have believed. 

[From the Chicago Post.] 

Bismarck, among other maxims, is credited with 
this : “Whoever carries the money bags is the people’s 
masterand experience has taught the people of this 
country that Bismarck is right. That astute states¬ 
man further observes that “centralization is tyranny, 
more or less.” The project of the National bank wing 
of inflationists is, in the outcome, to put into the hands 
of these banks the control of the entire circulation of 
the country. Their idea is to withdraw gradually the 
greenbacks, and leave the people at the mercy of a 
thoroughly organized monetary ring, actuated by a 
common interest, working under common laws, and af¬ 
forded every facility for combination and self-perpetua¬ 
tion. Instead of one United States bank, with a few 
branches, they propose to start with two thousand 
United States banks, and increase them indefinitely. 

[From the Chicago Times.] 

The fault of Congress does not in the least excuse 
Mr. Richardson for issuing irredeemable legal-tender 
notes in violation of law. Suppose Congress had ap¬ 
propriated $300,000,000 and provided only $100,000,000 
revenue ; would Mr. Richardson have been warranted 
in that case in issuing $200,000,000 of legal-tenders to 
meet the deficit? But he would have been just as 
much warranted in issuing $200,000,000 in the one case 
supposed, as he was in issuing $25,000,000 after the 
panic. It is not to the purpose to say that by issuing 
$200,000,000 he would have overstepped the limit of 
$400,000,000, for he never had any authority whatever 
to issue one dollar beyond the limit of $356,000,000. 
Mr. Richardson is solely responsible for the illegal is¬ 
sues, apd Congress is solely responsible for the deficit. 
If Mr. Richardson had simply done his duty, Congress 
would have been brought face to face with the deficit 
and with clamorous creditors the moment it met in 
December. It would have been forced to act prompt¬ 
ly, and probably both the inflation which has taken 
place and that with which the country is now threat 
ened, would have been avoided. 

[From the St. Louis Democrat.] 

Not one of the advocates of the various schemes for 
supplying the West with more currency can suggest a 
practical answer to this question, viz.: Admitting that 
the government should be willing to exchange green¬ 
backs for bonds, or that it should authorize more Na¬ 
tional banks and the issue of more bank notes based 
on bonds, where is the West to get the bonds ? The West 
does not hold them now, for, if it did, it could get 
greenbacks for them any day; and, if the West must 
purchase bonds what would it give in exchange for 
them ? 

[From the Springfield (Mass.) Republican.] 

In the U. S. Senate much of the debate has been 
pitched to a low key, and even if the party of good 
economy triumph, they will have carried a measure 
scarcely worth fighting for. Manifestly, the finance 
committee should have taken up a strong measure, like 
. Sherman’s, reported it early and made a square fight 
on it. They were sure of a majority in the beginning ; 
they have lost votes since, and now it is doubtful, even 
after the able debates which have been devoted to the 
subject, if anything really worth doing will be done. 
Leadership and a definite programme have been the 
great things lacking. If Sherman, Schurz, Sumner, 
Fenton, Morrill and the financial leaders of the Senate 
who are in accord, either with or without the support 
of Boutwell and Morton, had early settled upon some 
one plan of free banking and specie payment, and 
pushed it hard, we should have already had a bill per¬ 
fected and sent to the House, instead of the present 
disappointing wrangle over the recommitment of a 
worthless bill, with instructions to make it worse. 

[From the Washington Republican.] 

Congress should devote their energies to the husband¬ 
ing of the resources we have, instead of devising ways 
and means for further disturbance of the business of 
the country by the introduction of new and' untried 
schemes of finance. Let them inaugurate weekly pay¬ 
ments of wages to all Government employees where it 
is practicable. Let them provide for the redemption 



























THE FIHAHCIAL RECORD 


10 


of the legal tenders in gold, at some fixed future date, 
upon the principle contained in Hon. Freeman Clarke’s 
bill. And then let banking be free and unrestricted, 
except by the laws of supply and demand, providing 
only that ample Government security to the note¬ 
holder shall be given. Then all people can bank who 
desire to do so and have the money to buy the bonds, 
and they would receive such a share of deposits as 
their reputation for honesty and fair-dealing would at¬ 
tract to them. 

The Woonsocket, (R. I.) Patriot, published in a man¬ 
ufacturing community, says,— 

We have yet to learn that an irredeemable or incon¬ 
vertible paper money currency is an honest medium 
to measure values, and one that does not entail a long- 
catalogue of disaster to the nation or people who adopt 
and perpetuate it. Nothing else save a return to 
specie payments will place all our commercial, finan¬ 
cial and manufacturing interests on a better basis than 
to-day. 

[From the Cleveland, (O)., Leader.] 

There are a few men in Congress—particularly the 
Senate—who made up their minds before the session 
began that the people, and particulary the West, wanted 
nothing so much as to have the currency diluted and 
the country filled with a few million dollars more of ir¬ 
redeemable paper. Prominent among this class of men 
were Senator Morton and Senator Logan. They have 
done their best in favor of inflation, and, so far as we 
have seen, the people of Indiana are content with what 
Mr. Morton has been doing. But in Illinois it is quite 
otherwise. The merchants of Chicago, the sound think¬ 
ing men who rebuilt their stores after the great fire and 
went through the panic of last fall without suspending, 
know that the policy advocated by Mr. Logan is the 
road to still worse difficulties in the future, and they 
have therefore sent to Senator Sherman a series of reso¬ 
lutions which will make Senator Logan’s ears burn 
when he reads them. 


What Chicago Merchants Think. 

At a recent meeting of the Chicago Merchants’ Ex¬ 
change, the following resolutions, among others, were 
adopted and forwarded to Washington : 

Resolved, That a forced circulation of irredeemable paper, as 
money, can only be justified by great and necessitous emer¬ 
gencies, and ought to be restricted as speedily as consistent with 
public safety; that no such emergency now exists, and any in¬ 
crease of currency would only depreciate that already existing, 
and disturb and derange values generally. 

Resolved, That the faith of the government has been solemnly 
pledged to the redemption of its currency, and that its honor 
is involved in the fulfilment of its pledge, already too long de¬ 
layed; and that we recognize no distinction between the gov¬ 
ernment and ourselves in respect to the ordinary obligation to 
fulfill its promises. 

As a Chicago newspaper well says, the proposition 
contained in the first resolution is one which the courts 
have uniformly held to be true, so far as they have ad¬ 
mitted the right of Congress to force irredeemable pa¬ 
per into circulation at all. No respectable judicial trib¬ 
unal in the country has ever sustained the legal-tender 
act on any other ground than that of military necessity, 
or held that Congress possessed the constitutional pow¬ 
er to pass such an act, except in the presence of “great 
and necessitous emergencies.” The second proposi¬ 
tion, that no such emergency now exists, is incontesta¬ 
bly true, and so is the statement made in the second res¬ 
olution. An individual cquld not deal with his creditors 
as the United States is dealing with the holders of its 
notes. He could not refuse to meet his overdue paper, 
and at the same time issue more paper, without losing 
his credit. The merchants of Chicago recognize no dis¬ 
tinction in this matter, so far as obligation is concerned, 
between the government and themselves. The only 
difference i3 that the government has more brute force 
than the individual. It can give its dishonored prom¬ 
ises a forced circulation, which the individual cannot 
do. But there is no moral difference. What is dishon¬ 
orable in the individual is equally so in the govern¬ 
ment. It having been asserted that the action of the 
Chicago merchants was of no significance because of 
the small number at the meeting, the Tribune says that, 
to be sure, there were only ten persons present, but 
they met without pre«oncert, in pursuance of a pub¬ 
lished notice ; and the fact that they were unanimous¬ 
ly opposed to inflation is as fair an indication of the 
prevailing sentiment as could readily be obtained. 
If the opinion of the wholesale grocers of the city 
were wanted on any particular subject, and an inquiry 
were addressed to ten of them taken at random, and 
if they all gave the same answer, it would be naturally 
concluded that the trade were nearly unanimous on 
that subject. Besides, the resolutions were afterwards 


| signed by a majority of the members. A remon¬ 
strance against expansion of the greenback currency, 
signed by 270 Chicago business men, not one of whom 
suspended payment after the panic, was sent to Sena¬ 
tor Oglesby, and in February, a similar paper, with 
457 signatures of the same class of men, was in readi¬ 
ness to be sent either to the Senate or the House. “The 
fact is,” says the Tribune, “that the business men of 
Chicago are not in favor of repealing the laws against 
counterfeiting. It would be cheaper and more expedi¬ 
tious to let the counterfeiters do it than to impose the 
work upon the Treasury Department, for, in that case, 
all the difficulties of getting the money into circulation 
would be avoided.” 


The Folly of Inflation. 

Senator Ferry and Judge Kelley say that the reason 
business is dull, although the outstanding circulation 
has been increased, is that greenbacks are hoarded. 
Let us see. 

At the close of the second week in February, 1873, 
the total deposits in the banks of the three cities of 
New York, Boston and Philadelphia, amounted to $313,- 
798,031; at the corresponding date in 1874, the deposits 
in the same banks were $341,285, 550; an increase of 
27,487,519, or more than the entire increase of currency 
outstanding. 

A comparison of loans shows that there was a de¬ 
crease in 1874, while the rate of discount is now lower. 
This demonstrates that, so far as the great commercial 
centers are concerned, inflation has been useless, for 
the money is all lying idle and cannot be lent; while 
the sections that complain of a scarcity have not been 
benefited by the inflation at all. s. 

Senator Morton’s Opinion as Expressed 
Six Years Ago. 

The business transactions of the country, amounting 
to many thousand million dollars in the course of the 
year, are conducted through the medium of the curren¬ 
cy, and if the currency is depreciated, fluctuating, and 
deceptive, the prosperity of the country must inevitably 
be seriously injured and its general progress and devel¬ 
opment delayed. Why is our currency depreciated? 
And why would it be depreciated if the Government 
did not owe a single bond? Because the greenback 
note is a promise by the Government to pay so many 
dollars on demand, which it does not pay. The promise 
is daily broken, and has long been dishonored. The note 
draws no interest, and the Government has fixed no time 
when it will pay it. Under such circumstances the 
note must be depreciated. The solvency or ultimate 
ability of the promiser never kept overdue paper at 
par, and never will. To do that, something more is re¬ 
quired than the ultimate wealth or ability of the prom¬ 
iser. There must be certainty in the payment and time 
of payment, and if the time of payment be deferred, 
compensation must be made by the payment of interest. 
.... What would be thought of a great railroad corpo¬ 
ration that should refuse to pay its overdue floating 
debt, and apply its current revenues to the liquidation 
of its long bonds, under the pretense that it would there¬ 
by improve its ability to pay its floating debt? While 
our overdue paper, drawing no interest, and for which 
no time of payment is fixed, and no preparation made, 
must necessarily be depreciated as it now is, still that 
depreciation would be far greater but for the general 
faith existing among the people that the Government 
will speedily make arrangements for its redemption. 
When this faith is broken, the currency will sink lower , and 

sink rapidly .One of the wealthiest men in the 

Northwest, now dead, who left some $5,000,000 to be 
divided among his heirs, had an unfortunate habit of 
refusing to pay his small debts. Instead of paying he 
would give his notes for them, refuse to pay the note at 
maturity, suffer himself to be sued, then hire a lawyer 
to fight the cases. The result was that his paper was 
hawked about the streets at 60 or 70 cents on the dol¬ 
lar, while perhaps that of his near neighbor, who kept 
a small store and was only worth $10,000, but who was 
prompt in the payment of his debts, could be sold at a 
very small discount.— Congressional Globe, part 1, third 
session, Fortieth Congress, 1868-’69, p. 102. 


Is Micawber Our Model? 

Senator Howe of Wisconsin, made the following re¬ 
marks, in 1868, and they are as true and timely now as 
then: 

The only financier, the only roaster of finance, under 
whom I ever studied was Wilkins Micawber, Esq. 
Mr. Micawber had a remarkable facility for contract¬ 
ing debts. That has characterized the United States 
for the past few years. Mr. Micawber had but a limit- 


| ed faculty for paying debts. That is another character¬ 
istic I have noticed in the United States for several 
years past. Mr. Micawber was an honorable man, an 
honorable debtor. So I hope the United States will 
turn out to be, as so far it has appeared to be. When 
Mr. Micawber met his creditor without any of the coin 
of the realm in his pocket, he met him like a man, and 
gave him his I. O. U., and discharged the debt! The 
United States has practiced upon the same principle so 
far. We were obliged to contract debts that we could 
not discharge in anything like monej'. We had got to 
employ something that was not money, somebody’s 
credit, and we did as Micawber did—we gave our credi¬ 
tors an I. O. U. We gave them our notes of hand; 
and every note that every one of you holds in his pocket, and I 
hope your pockets are full,Vs a certificate of the United 
States that you have advanced the amount of that note to the 
United States Government, over and above the proportion that 
was required of you under the tax laws of the country. But 
Mr. Micawber lacked one facility for circulating his 
paper which the Government possessed. His creditors 
were perfectly willing to take his notes because they 
could get nothing else. Our creditors were willing to 
take our notes for the same reason. But Mr. Micaw- 
ber could not enable his creditors to circulate his notes 
as money. We did effect that. We enabled our cred¬ 
itors, whom we compelled to take our notes, to pass 
them to their creditors and use them as money. 


Old Tatum. 

A PRACTICAL FINANCIER. 

During the war, I met in the South an old farmer who 
was called by his neighbors “Old Tatum.” He was a 
practical philosopher who relied upon nothing but the 
evidences of his senses; and inasmuch as he could but 
with difficulty spell .out a word or two in large print, he 
had a lofty contempt for book-learning. * 

I liked to talk with the old man, and once in conver¬ 
sation I happened to say something about the earth mov¬ 
ing around the sun. “Hold on,” said old Tatum; 
“what did you say there ? The earth moving around the 
sun! Where did you £etthat?” “Well,” I said, “I 
got it from the books.” “There again,” cried old Tatum, 
and he would fairey roll over with laughter—“there 
again, from the books. The earth moving around the 
sun ! And don’t I see every day with these, my own 
eyes, the sun moving around the earth ? “Don’t I see 
it rise there in the morning, and don’t I see it go down 
yonder every evening ? Ah,” said he, “you book-men 
can’t fool old Tatum.” What a shining light old Ta¬ 
tum would have been among the new school of political 
economists here 1 Would he not have thrown theory to 
the dogs like the very best of them ? “Here I see a diffi¬ 
culty,” old Tatum would say; “there are many persons 
in the United States who want money; the difficulty is, 
of course, there is not money enough to go round. 
What is to be done ? Inasmuch as we make money by 
printing it, let us print more until it will go around.” 
But, you may say, “Mr. Tatum, these bits of money 
are not proper money at all; they are promises to pay 
money; and the more you print of them the less will they 
be worth, and the less they are worth the less you can 
do with them in business; you cannot make the country 
rich in that way.” Such talk would not trouble old 
Tatum at all. He would laugh right in your face. “Do 
we not call these paper notes dollars?” old Tatum 
would say ; “are they not dollars ? Cannot I read it 
with my spectacles in big print upon them, ‘one dollar,’ 

‘ten dollars,’ ‘one hundred dollars?’ and i3 not the 
country better off when it has'fifteen hundred million 
of these dollars than when it has only seven hundred 
and fifty of them ? Ah, you can’t fool old Tatum, I tell 
you.”-— Carl Schurz. 


Humors of Finance. 

The Ohio State Journal makes the following sugges¬ 
tion : “We have no doubt that the shortest way to re¬ 
sumption would be through the issue of four hundred 
million greenback. That would make greenbacks 
worth about four dollars a cord, and the Grangers 
would mix them with their porn and burn them for 
fuel—then we should have specie payments as a fait ac¬ 
compli, without any plan of resumption.” 

Secretary Richardson (nobody knows why) resumed 
his gold sales at New York to-day, after a suspension of 
six months or so. He offered $1,000,000, not “in sums 
of $5 or less” as he resumed specie payments in silver 
last fail, but in larger lumps. The bids were twenty- 
seven in number, footing up $4,197,500, at prices rang, 
ing from 111 35-100 to 111 95-100. James Strathors & 
Co., said to be in Jay Gould’s speculations, bid for the 
whole million at from 111 87 to 111.15-16. 


The Financial Record is published by the Finance De¬ 
partment of the American Social Science Association, at 
their offices in New York and Boston. All communications 
respecting it may be addressed to the Secretary of the Asso¬ 
ciation, F. B. Sanborn, No. 5 Pemberton Square, (Room 21;, 
Boston; and all exchange papers, public documents, etc., may 
be forwarded to the same address. 






















CIRCULAR 


2 . 


The past year has not been one of extraordinary activity on the part of our Association; but neither have we been idle. The papers read at 
our last general meeting in May, and the publication of the fifth number of the Journal of Social Science, containing most of these papers, along with 
much other matter, will bear witness to this statement; but in fact much more was done during the year than this alone would imply. Our acting 
Secretary, Mr. James M. Barnard (who was succeeded on the 8tli of October by the present Secretary, Mr. F. B. Sanborn), in his report made to the 
annual meeting in October, mentioned some of the work carried on under his direction, and through his zealous efforts. The Boston office of the As¬ 
sociation was in his charge, and he maintained an extensive correspondence with our members and other persons interested in Social Science, in this 
country and in Europe. This correspondence has made us acquainted with important movements in various parts of the country and abroad, and has 
often enabled us to contribute as well as to receive important information. The then existing department committees on Education, Health, and Ju¬ 
risprudence, held meetings and considered pressing questions; the Health Department being particularly active. Besides its business meetings, it 
held a Conference in Boston, in the spring, for the special discussion of the management of Insane Asylums, which was largely attended by persons 
competent to treat the subject. A Conference on the Prison question was held in Boston at the instance of the Executive Committee, about the same 
time,—one of its objects being to aid in the passage of a bill establishing distinct prisons for women, then before the Massachusetts Legislature. 

It is not chiefly, however, as the advocate of measures to be carried, that the American Social Science Association appears before the public. 
Its duty is rather to furnish a laboratory for investigations, an arena for discussions, a registry for facts and experiments, a bureau for questions and 
answers, in regard to the multiform matters coming under observation in our five present departments or sections, of Education, Health, Jurispru¬ 
dence, Finance, and Social Economy. It will therefore be one of the main objects of the Executive Committee, carrying forward the work already 
begun, to put themselves in communication during the current year with as many organized bodies and individual inquirers as possible, and to obtain 
from them existing facts concerning the application of Social Science in any of these departments. To this end the Secretary is corresponding with 
Boards of Education, of Health, of Trade, and of Public Charities; officers of prisons, and reformatories, managers of other public establishments, 
employers of industry, experts in matters of revenue, currency, taxation, transportation, the distribution of products, etc.,—in short, with such persons 
as may be supposed capable of enlightening the Association, and through it the American public, concerning the matters with which Social Science 
deals. What is thus acquired is to be publithsd from time to time, iu such ways' as are opeD to the Association, and with more regularity and fre¬ 
quency than heretofore. 

Another feature of our work for 1874 will be the formation of local committees or branch associations in different parts of the country, through 
which the parent association can reach more readily the sources of information and of influence in each locality. We also aim to establish intimate 
relations with special organizations working in the various departments of Social Science, such as Health Associations, Prison Associations, Conven¬ 
tions of Teachers, of Superintendents of Insane and Inebriates Asylums, and other specialists; in order that there may be good understanding and 
hearty co-operation between these several agencies and our own. 

To do this, or any other work of the kind, successfully, we need many members in all sections of the United States, and that these members 
shall do what they can to further the objects of our Association. We ought to have at least a thousand members, who should contribute the desired 
amount (not a large one) for the purpose of maintaining the Association in a state of useful activity, and among whom should also be prepared, in 
each year, papers on the subjects claiming discussion at our general meetings, and at the meetings of departments and of branch associations. The 
British Association for the same objects, antedating ours by eight years, numbers now nearly a thousand members, and has attained a prominent 
position as an aid to legislation and to the promotion of measures for the good of society. It is the hope and will be the effort of the Executive Com¬ 
mittee to make the American Association worthy of comparison with its British prototype. 

Our Association aims to insure the welfare of society by promoting the careful study and judicious practical treatment of questions relating to 
education, employment, and government, including reform in the Civil and Diplomatic Service, in the management of public and private institutions, 
financial affairs and sanitary interests. The transactions, as far as published, show what has been attempted, and to some extent what has been 
accomplished in the prosecution of the objects of the Association. 

The general expenses are met by the annual subscriptions of members. The annual membership assessment is Five Dollars, the payment of 
which entitles the subscriber to receive the publications of the Association for the year. Life Memberships of $100 each, and donations of various 
amounts, have hitherto sufficed to meet the expenses of printing, which are necessarily large. 

An extended membership, as an essential means for the efficient prosecution of the work of the Association, is cordially invited. Subscriptions 
may be remitted to J. S. Blatchford, Treasurer, 13 Exchange Street, Boston, Mass. 


THE GENERAL MEETING OF 1874. 

The customary General Meeting of the Association will probably take place this year at New York, beginning about the 26th o? May. The 
persons engaged to read papers, with their subjects, so far as determined upon, are as follows. Others have been invited, and the whole number of 
addresses and papers will probably be about Twenty. 

An Address by the President, George William Curtis, Esq. 

By Rev. T. D. Woolsey, LL.D., of New Haven, a Paper on some topic of International Law. 

By David A. Wells, Esq., of Norwich, Ct., a Paper on “Taxation” 

By Hon. Andrew D. White, of Cornell University, a Paper on “The Relation of National and State Governments to Advanced Education ” 
By Dr. D. C. Gilman, President of the University of California, a Paper on “The Commerce of the Pacific Coast by Sea and Land as 
influencing the future of California and of the United States.” ’ 

By Gardiner G. Hubbard, Esq., of Cambridge, a Paper on “American and European Railroads.” 

By Willard C. Flagg, Esq., of Moro, Ill., a Paper on “The Farmers’ Movement in the Western States.” 

By William W. Greenough, Esq., of Boston, a Paper on “Public Libraries.” 

By Z. R. Brock way, Esq., of Detroit, Mich., a Paper on “The Reformation of Prisoners.” 

By Dr. J. Foster Jenkins, of New York, a Paper on “Tent Hospitals ” 

By Gamaliel Bradford, Esq., of Boston, a Paper on “The Future of Parties.” 

By Hon. Charles A. Buckalew, of Bloomsburg, Pa., a Paper on “The New Pennsylvania Constitution.” 

By Dr. Alfred L. Carroll, of New York, a Paper on “Sanitary Science in Schools and Colleges .” 

By Professor William G. Sumner, of New Haven, Ct., a Paper on some Financial subject yet to be named. 

By Dr. Albert Day, of Boston, a Paper on “ The History and Results of Inebriate Asylums in America.” 

By the General Secretary, F. B. Sanborn, a Report on “The Work of Social Science in the United States.” 

It is also proposed to hold, in connection with the General Meeting, a Conference of the Boards of Public Charities in the United States „n,1 
another Conference of the State Boards of Health, and of those established in the large cities, and the Secretary is now in correspondence with £ 
Boards on this subject. The length of the meeting is fixed at Four Days, which would allow about five papers for each day,-say four for each day 
session, and tiro for each evening session of three days, leaving one day free for other occupations. It is proposed to allow half an hour for the 
leading of each Paper and half an hour for its discussion-besides one half day devoted to general discussion of such topics as prove to be of the 

greatest interest. A few persons, say two for each Paper, will be invited to discuss it in speeches of ten minutes each, leaving ten minutes on each 
Paper for the members who may wish to speak. “nuies on eacn 


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FINANCIAL RECORD. 

“WE NEED ONE THING BESIDES MORE MONEY, AND THAT IS BETTER MONEY ."-Senator Zach. Chandler. 


VOL. I. 


THURSDAY, MARCH 12, 1874. 


NO. 6. 


Thb Financial Record will be published weekly three 
months, and may be continued beyond that period It will 
be, as its name indicates, a record of facts and opinions on 
the questions of National Finance which are now so impor¬ 
tant to the American people; and all persons, editors or others, 
to whom it is sent, are invited to use it freely, and to copy from 
it without hesitation if they see fit. It will be sent free of 
postage, to all persons who will remit 60 cents to the publishers 
at No. 6 Pemberton Square, Boston. All editors who may re¬ 
ceive it are invited to send their papers in exchange. 


By the death of Charles Sumner, the head of the 
American Senate, the cause of sound finance, in com¬ 
mon with all good causes, loses a sturdy and enlight¬ 
ened champion. Honor to his memory ! 


The Spirit of Congress. 

The Senate did not reoume financial discussion until 
Tuesday. Mr. Ferry, (Mich.) seems to have made 
good use of his time during iilness, for he came back 
prepared to deliver one of the longest and most elab¬ 
orate speeches of the session. He advocated free 
banking and ‘-moderate expansion.” No full report of 
his remarks has yet reached us. 

A Washington dispatch of March 8, says : 

A considerable change has recently taken place in the 
minds of members of Congress regarding inflation of 
the National bank circulation. Letters are coming in to 
members from the Western and Southern States where 
an increase of circulation is expected to be of benefit 
and to afford relief. The writers are generally men of 
influence and high standing in their communities and 
are believed to reflect the sentiments of the better and 
more intelligent citizens of those sections. The ques¬ 
tions of inflation, contraction and resumption are intel¬ 
ligently discussed and the weight of opinion is decided¬ 
ly adverse to any increase of currency, for the reason 
that their people would realize no benefit from such in¬ 
flation, and that whatever, if any, additional money is 
provided for by Congress, will certainly be drained into 
the several large money centers of the country. 

In the House Mr. Kelley took advantage of the debate 
on an appropriation bill to dilate on the blessings of 
paper money; but he brought forward no new argu¬ 
ments. Mr. Beck, in the course of the same debate, 
took ground in favor of inflation. 

The “Reserve.” 

The New York merchants and men of business, rep¬ 
resenting nearly $500,000,000, have sent to Washington 
the following petition against legalizing Secretary 
Richardson’s unlawful issue of the $26,000,000 mis¬ 
called reserve: 

Your petitioners beg leave respectfully to represent 
that they are greatly alarmed at the assumption by the 
Secretary of the Treasury of the right to issue new- Uni¬ 
ted States notes, commonly known as greenbacks, 
without the sanction of law. 

The issue of irredeemable paper money, and making 
it a legal tender, is simply levying a forced loan upon 
the people of the United States. Such an extreme 
measure can only be excused by the vital necessity 
arising from a great war, and is even then in direct 
violation of all ordinary constitutional powers. So far 
as your petitioners are aware, no civilized government 
has ever resorted to the issue of irredeemable paper 
money in a time of peace; and it is a most remarkable 
event t hat the great, rich, and prosperous nation of the 
United States should resort to such a ruinous expedient, 
without the slightest necessity to excuse it. 

Your petitioners consequently, respectfully, but most 
earnestly urge your honorable body to put an immedi¬ 
ate stop to the further issue of greenbacks by the Sec¬ 
retary of the Treasury, and to make arrangements by 
the negotiation of bonds or otherwise, to call in and 
cancel at once every dollar of the so-called reserve 
which has been issued. 

In 1868 Senator Williams, now attorney general, said 
of the bill under which Secretary Richardson claims 
power to inflate the currency,— 

Nobody will pretend for one moment that this bill author¬ 
izes the Secretary of the Treasury to issue any additional 
quantity of treasury notes, but it simply protects the 
Treasury from any funher contraction of the currency. 
And it is not claimed that there is any law in existence which 
authorizes the Secretary of the Treasury to issue addi¬ 
tional treasury notes. 

Senator Sherman said. . . . The notes that have been 


taken in and cancelled cannot be reissued. I know no 
law under which a United States note, once cancelled, 
can be reissued or anything else put in its place as a 
substitute. 


Shall Bankrupts get a Forced Loan? 

Our legal-tender greenbacks are a forced loan with¬ 
out interest from the whole people of the country; 
say rather, a loan with interest the wrong way, for 
the people who lend the money really pay interest on 
it in the higher prices that it has produced. The green¬ 
backs were issued under the war-power and as a war 
measure; the Supreme Court have so decided. With¬ 
out a state of war no more should be issued, in defer¬ 
ence to the Constitution. These things being so, it is 
curious to hear newspapers like the Wilmington (N.C.) 
Journal, use language like this : 

We think this is no time for the consideration in any 
aspect of the question of resumption of specie pay¬ 
ments. If anything can save the farming interest of the 
South from the bankruptcy now impending over it, it 
will be an inflated currency ; in other words a cheap 
and abundant legal tender for the payment of debts. 
The Southern farmers as a class are, we fear, very 
nearly hopelessly in debt, and as the articles for which 
those debts were contracted were not valued at specie 
prices, we can but think it gross injustice to demand 
payment, in specie, or its equivalent. This is the 
whole question in a nutshell. Cheap money and a 
plenty of money is the only thing that now bears the 
semblance even of a panacea for the ills of North Car¬ 
olina and of the South. To us it seems clear that 
there ought as rapidly as possible to be a material, sub- 
stancial expansion and inflation of the currency. The busi¬ 
ness necessities of both South and West require it, 
and require it at once. 

In other words, if the dollar greenback is now worth 
89 cents, the bankrupt debtors of the Carolinas must 
have it reduced in value (by a new issue of illegal mon¬ 
ey) to 80 cents before the notes fall due, so that they 
may save $100 on every $1000 that that they ow-e. 
Here would not only be a forced loan to the govern¬ 
ment but a forced gift (or theft) of 10 per cent on ev¬ 
ery debt to the debtor classes. Both the loan and the 
gift would be paid out of the pockets of the creditor 
class, the working men and working women of the 
whole country, on whom falls ultimately the whole 
burden of our financial blunders. Quicquid delirant 
regesplectuntur Achivi, said the old fellow at the siege of 
Troy. Translated into the vernacular of our country 
this means that “Whatever nonsense Congress votes 
for, the laboring men. of the United States must pay 
for.” How do they like it so far as they have got ? 
And how much farther will they go 1 

The Two Voices. 

“Mr. Orator Puff had two tones in his voice, 

The one was B alt, and the other down so.” 

It is always best for newspaper editors to make sure 
that their facts do not belie their opinions. Facts are 
inconvenient things sometimes, and if the newspapers 
which complain of a lack of currency, wish to make their 
readers believe them, they must give fresh instructions 
to their financial editors. 

On the 6th of March the Chicago Inter-Ocean, in 
nearly three editorial columns, urged the necessity for 
more currency, but its financial column the same day 
contained the following:— 

In some quafters there was reported a better demand 
for money to da y, owing to the increased speculative move¬ 
ment in provisions and abetter inquiry from the countryfur cur¬ 
rency, which indicates that the farmers are making 
preparations to forward their produce to market in an¬ 
ticipation of a liberal movement on the opening of 
navigation. In other quarters bankers report they are unable 
to place all their loanable funds at the current rate of interest 
on such paper as they desire to accept. Bankers are giving 
holders of outside paper more encouragement, and appear to 
be more willing to accept offerings for longer dates. 
On the street money is quiet, with no change to note. 

We learn from this that speculation is rising, and 
that in Chicago there is an abundance of money. We 


quote next from the Indianapolis Journal, Senator Mor¬ 
ton’s home organ, (March 7): 

Money is somewhat easier, though in active demand. 
It is thought by leading business men that the supply 
of funds for investment will soon be more plentiful. 
The rates of discount and the selling prices on Ex¬ 
change are without change; the supply of the latter is 
good. A gratifying circumstance, and one which 
proves the growing influence of Indianapolis as a financial 
center, is the growing correspondence of our banks, who 
are now competing successfully with Chicago for a large area 
of Southern and Central Illinois as a banking center. 

Senator Morton should look after this. Can it be 
possible that Indiana is so well supplied with bank¬ 
ing facilities, that it can compete with Chicago and 
Cincinnati as a banking center? If so, what becomes 
of the argument that business in Indiana is suffering 
from a lack of such facilities ? The Philadelphia Press, 
(March 6,) in an editorial paragraph, criticizing the 
New York Commercial Advertiser, for favoring contrac¬ 
tion while business is inactive, said; 

This is commended to the attention of those less 
honest contractionists who keep assuring everybody 
that the couutry has recovered from the panic, and 
that there are no further indications of an in adequate 
currency. If there is money enough in circulation, 
why does it not circulate and business revive 1 

But the same issue of the Press contained in its 
financial columns these statements : 

The rates for money continue unchanged, although 
there is a tendency to lower figures. Call loans were 
effected at 4, 5, and 6 per cent, the latter figure being 
paid on miscellaneous securities. Prime commercial 
paper is eagerly sought after by our financial institu¬ 
tions at 6 per cent. The immense balances in the New 
York banks and saving funds seeking investment have 
lowered rates very materially, and loans on call have been 
effected at 2 and 3 per cent, per annum. 

“Oh, Orator Puff, Mr. Orator Puff! 

One voice for an orator’s surely enough.” 


The Workingmen and the Currency. 

Daniel Webster, who used to be thought to have 
some sense, but whose old-fashioned notions have been 
quite refuted by statesmen like Pendleton, Baker, Kel¬ 
ley and Logan, said many years ago,— 

A depreciated currency, sudden changes of prices, 
paper money, faliing between morning and noon and 
falling still lower between noon and night, these things 
constitute the very harvest time of speculators, and of 
the whole race, of those who are at once idle and craf¬ 
ty ; and of that other race, too, the Catalines of all 
times, marked so as to be known forever by one stroke 
of the historian’s pen, those “greedy of other meu’s 
property and prodigal of their own.”- Capitalists, too, 
may outlive such times. They may either prey on the 
earnings of labor, by their cent, per cent., or they may 
hoard. But the laboring man, what can he hoard I 
Preying on nobody, he becomes the prey of all. His proper¬ 
ty is in his hands. His reliance, his fund, his produc¬ 
tive freehold, his all, is his labor. Whether he work on 
his own small capital, or"another’s, his living is still 
earned by his industry; and w r hen the money of the 
country becomes depreciated and debased, whether it 
be adulterated coin or paper ivithout credit, that industry is 
robbed of its reward. He then labors for a country whose 
laws cheat him out of his bread. 


Spirit of tlie Press. 

Ah able correspondent of the Chicago Western Rural, 
(which favors the Grangers,) says,— 

Our greenbacks are not money. Intrinsically, they 
are worth, perhaps, twenty-five cents a pound with a 
deduction on account of the engravers’ ink on them. 
But they represent money, and, having passed the or¬ 
deal of the late severe panic, may be said to be the next 
best thing to gold, (which we have not got and so can¬ 
not use.) The wealth of this country is a certain fixed 
amount—estimated at some thirty billions of dollars. 
The promises to pay are backed by this wealth. Now, 
the issue of additional promises to pay, unaccompanied 
with an increase of the assets at the back of them, must 
simply render existing promises to pay, worth less by 
the amount of the additional issue. I do not see how 
this fact can be controverted, especially in view of the 
fact that each contraction of the currency has been fol-. 
lowed by a fall in the price of gold—that is the value 






























THE FIHAHCIAL RECORD. 


12 


of the greenbacks left in existence has increased by the 
amount of those extinguished. 

[From the Warrensburg (Mo.) Standard.] 

The inflationists say there is not currency enough to 
do the business of the country. We find this eminent¬ 
ly true. We are wofully short of money. A little bal¬ 
looning would help the size of our pocket-book wonder¬ 
fully. Truq, they have more money in the banks at 
the business centers than they can use. But then it 
isn’t ours, and how to get it is the conundrum. We 
know that if we had wheat, or corn, or hogs, or mules, 
or something else to exchange for it, we could get all 
the money we need. But, unfortunately, we haven’t 
got the wheat, and corn and things. There is but one 
way out of the woods for us, and that is for Congress 
to pass an act, giving us of the West, a pocketful apiece. 
We are getting impatient for Mr. Bogy and Mr. Crit¬ 
tenden to come home, and bring us that hundred mil¬ 
lions. 

[Fromthe Watseka(IlL) Republican.] 

To-day the same hated toe, Avarice, which for years 
fettered the limbs of human beings and waxed rich, 
grew defiant, and mocked at the “mudsills” of society, 
now rears its unsightly head, not in the sunny South 
this time, but in the East, and seeks to enslave the i 
toiling freemen of the West and make the inhabitants 
of the broad prairies and sunny glades of the South, 
toil uncomplainingly for the money king of the East, 
at such price as he is pleased to name ; and when the 
tiller of the soil asks that his labors may be fitly re- j 
warded, he is simply sneered at as an “inflationist,” not j 
possessed of sufficient intelligence to know what is best 
for him, his family or his country. 

[From the X. Y. Evening Post.] 

The situation at Washington, by which we particu¬ 
larly refer to the indifference of Congress to finan¬ 
cial legislation, gives rise to a great deal of scandal, and 
reports of a most disparaging character may be heard 
in Wall Street in regard to certain Congressmen and 
others. Knowing how* easy it is to attach unworthy 
motives to action or want of action touching the mar¬ 
kets, we forbear to publish what we hear, and can only 
say that Congress will relieve itself of suspicion and 
odium by prompt action on the finances, the first step 
to be taken being the definement of the legal-tender 
circulation, and that the administration at Washington 
will gain credit by using its influence to accomplish 
this end. There ought to be no connection between the 
management of the finances and political elections, and 
certainly there should be influential men in Washing 
ton who are able to see that the prostration of the busi¬ 
ness of the whole country, which depression at present 
is unexampled, is too serious a matter to trifle with. 
None are flourishing now except a clique of speculators 
in Wall Street. 

[From the N. Y. Financial Chronicle.] 

The currency discussions in Congress put into the 
hands of certain leading statesmen so much power to 
make money by an adroit use of their opportunities 
that it would be indeed surprising if surmises and sus 
picions did not insinuate themselves. In a decent re¬ 
gard for their own reputation, then, Congressmen may 
find potent reasons why this suspense about the curren- | 
cy bills should come to an end. But there are other 
reasons much more numerous and important. Every j 
day of suspense costs the country an immense sum ol j 
money. If it could be decided that Congress would 
not touch the currency—either the greenbacks or the ! 
bank notes—but would leave the Secretary to take in 
his over-issues from his accumulating revenue, the busi¬ 
ness of the country would begin instantly to revive. 
At present what do we see? Everywhere there is a 
spirit of hesitancy, fear and incertitude. The prospects 

of trade are gloomy. 

[From the New Orleans Picayune.] 

In the recent vote instructing the Finance Committee 
to report a bill increasing the national bank circulation 
to $400,000,000, the carpet-baggers held the balance of 
power and carried the day for inflation. They say their 
people are clamorous for more money, and they pro¬ 
pose to meet the popular demand, by setting the paper 
mills more vigorously to work. The votes of these 
profound statesmen, will decide the action of the Sen- 
&t6* 

[From the New Haven (Ct.) Palladium.] 

The history of every nation after it has embarked 
upon a tide of irredeemable paper has been essentially 
the same. The first result of a currency redundancy 
has been cheapness of loanable capital, rapid circula¬ 
tion and mercantile activity. Men are deceived by an 
appearance of prosperity, which leads them into specu¬ 
lation and risk. This goes on until overtrading and 
undue expansion of credit reach the limit of the circu¬ 
lation. Then ensues a money stringency, a crash and 
the phenomenon, which we call panic. ^ Men are driven 
to contract at the very time when they should lend 
freely. It is at this point or soon after it that govern¬ 
ments always have deluded themselves with the idea 
that the currency is insufficient. They mistake the 
hoarding of it, the desire of men to get it, which is a ; 
mere incident of the panic, as evidence of its value and j 
inadequacy of amount. They listen to the clamor of 
the debtor victims for additions to the currency, each J 
point in the depreciation of which signifies a aiminu* j 


tion in their debts. It is to precisely this demand that ' 
our own Senate is now listening. 

[From the Milwaukee Journal of Commerce.] 

The inflation party consists of the delinquent Western 
debtor and the unsubstantial Eastern speculator. As 
the worst wheel in the wagon makes the most noise, so 
this school of financiers has of late nearly monopolized 
attention in the halls of legislation and in the columns 
of the press. The believers in a currency that shall 
efficiently and equitably perform the services of com¬ 
merce, and at the same time honorably represent the 
good faith of the nation, are a large and powerful, 
although a quiet class. This class includes the sound¬ 
est thinking farmers of the West, and at the East the 
sound, conservative business man who demands unitor- j 
mity for the measure of value; while it is the reckless j 
speculator who hopes to thrive by the fluctuations of an j 
inflated paper currency. The advocates of inflation 
are Vanderbilt and Tom Scott and Jay Gould and Jay 
Cooke—not A. T. Stewart, or Wm. E. Dodge, or A. A. 
Low, or S. B. Chittenden or H. B. Claflin. A currency 
the volume of which may be changed by any finance 
tinker that may chance to become Secretary of the 
Treasury, makes every farmer who sows wheat in the 
spring to sell in the fail, as well as every merchant who 
imports goods to job to his trade, an involuntary spec- ! 
ulator. 

[From the Memphis Avalanche.] 

“The Soutti needs more capital, not more currency.” J 
In using this phrase Senator Schurz aptly described ; 
the financial situation. If S100,000,000 more currency 
were placed in the National banks south of the Ohio 
river, unless inducements greater than the present ones j 
were offered, in a short time this vast sum would seek i 
the great financial and commercial centers in the East j 
for reinvestment. What this section needs is more capi- ! 
tal permanently invested in manufactures, railroads and 
agricultural pursuits. But it will not come until its j 
owners are satisfied that there is an ample field for its j 
successful employment. The localities offering extra 
inducements not only hold their proportion of the cur¬ 
rency, but make serious inroads on that to which others, 
less favored, are entitled. This condition must exist j 
until Congressional legislation changes the natural law’s i 
governing trade—a change, by the way, which legisla- j 
tion is not likely to do. 

[From the Washington Chronicle.] 

The sea of an irredeemable paper currency is as 
deep as the bottomless pit, and the Secretary can “pay 
out” till he has run through the last resource of the na¬ 
tion and still be no better off. What we want is a solid, 
secure foundation for all the legitimate operations of 
our commercial and banking systems. This cannot be 
had without a financial purpose on the part of the Gov¬ 
ernment as fixed as the poler-star. In inflation there 
is nothing but a consumption of vital forces, which 
will sooner or later destroy the credit of the United 
States. We may have wealth in gold and silver, in 
commerce and manufactures, in lands and invest¬ 
ments, but the destruction of all these is not beyond 
the ingenuity of plate-engravers and the capacity of 
printing presses. With the gradual resumption of 
specie payments we shall note a gradual return to the 
security of honest and sober industry. 

[From the Cincinnati Enquirer.] 

The payment of five-twenty bonds in greenbacks, 
which both we and Mr. Pendleton advocated, was not 
only no repudiation, but was in direct fulfillment of the 
contract with the bondholders. They were expected 
to be paid in greenbacks. Had that policy been* car¬ 
ried out half of our National debt would have been 
now paid, and we should have had good easy times. 
When the next Democratic National Convention is held 
the currency question will not be neglected. 

[From the Cincinnati Commercial,] 

If tho e who are fiddling in legislation over redistri¬ 
bution plans will drop them and address themselves 
to providing measures by which the question of the 
supply of currency will be left to the business of the 
country, they will do, in course of time, doubtless, some 
good—but their delusive subterfuges amount to foolish 
tinkering, calculated to do more harm than good 

[From the Baltimore American.] 

To read the speeches of the inflationists, both in the 
Senate and the House, one would think that paper i 
money was something new in finance; that it was 
filled with^glorious possibilities, was luminous with bril¬ 
liant prospects,and t hat it was to be the proud distinction 
of the statesmen of the Forty-third Congress to publish 
the merits of the new discovery to the nations of the 
world. The native force and penetration of the intel i 
lect of Daniel Webster was, perhaps, superior to that ; 
of any other statesman this country has ever produced, 
yet-he did not venture to approach the subject in the 
easy and confident manner of Messrs. Ferry, Morton, 
or Logan, but devoted himself to the most careful study 
upon it, having recourse to the books of the “theorists,” 
whom Mr. Morton and his followers hold in such con¬ 
tempt, as well as inquiring into the condition and cir¬ 
cumstances of his own country. 

[From the Sacramento, (Cal.,) Record ] 

As a demoralizing agency the greenback has few ri- j 
vals and no superiors. If we wish to gage to the ex- \ 


tent of the immorality it has produced, we need but 
call to mind the fact that to-day there is a large portion 
of the public who hold that a paper promise to pay is 
precisely equivalent to an actual payment; that a rag 
is identical with a standard of value. While in the be¬ 
ginning it was claimed that a dollar is whatever the 
law makes a dollar, now it is attempted to transmute 
paper into gold by insisting that a paper dollar is 25 8- 
10 grains of gold of nine-tenths fineness. The threat¬ 
ened inflation of currency is a logical result from such 
teachings as these. 

[From the Providence Journal.] 

No legislation on this subject can be deemed truly 
wise which does not assist in preparing the way for the 
restoration of a specie currency at the earliest possi¬ 
ble moment. To do anything which retards this re¬ 
sult can be nothing but a great calamity to the coun¬ 
try. 


Inflation Raises the Interest Rate. 

Why will the inflation of an irredeemable paper cur¬ 
rency not lower but raise the rates of interest 1 In the 
first place, in depreciating the currency, it vill make a 
larger amount of currency necessary to perform the 
same transactions in business, and the aggregate amount 
of interest which you would have to pay for the sura 
you want for the same trapsaetions would necessarily 
be larger. That, I think, is obvious. In the second 
place, when the currency is inflated it incites specula¬ 
tion and gambling. This fact is so notorious that no¬ 
body questions it. Speculation and gambling, dealing 
in large ventures and working for very large profits, 
induce, and in most cases force, those engaged in them 
to pay high rates of interest in order to obtain the mon¬ 
ey with which to float their speculative enterprises 
from which they expect such large profits. As soon 
as speculation rules the money market, the rates of in¬ 
terest will therefore necessarily rise, and legitimate 
business, from which money is diverted by speculation, 
must conform itself to those high rates in order to ob¬ 
tain the money which it needs; and hence a general 
rise of rates. 

But still another element comes in here to produce 
the same effect, and that is the element of risk; When 
an irredeemable currency is inflated, it depreciates in 
value. The capitalist who lends out money must take 
that contingency into consideration. He has to run 
what I have already called the gambling risk. He 
will prefer to lend it out on call, in the first place, so as 
to be able to put his hand upon it as soon as the chances 
so turn that he may lose by leaving it out longer where 
he has put it; but even then he will want to cover his 
risk, and he will do that by demanding a high¬ 
er rate of interest, sufficient to cover that risk. 
Hence it is that loans on call are preferred, and 
a higher rate of interest is demanded by lenders to 
cover the gambling risk, under the influence exercised 
by an irredeemable currency, which, by its fluctuations, 
render the value of the money invested in a loan inse¬ 
cure .—Speech of Carl Schurz, Feb. 24. 


Humors of Finance. 

Mr. Merrimon, (N. C.) seems to think that the vol¬ 
ume of the currency should equal the value of products 
to be marketed. To be consistent he should ask for not 
less than $6,000,000,000 of bank notes and greenbacks; 
and not only so, but for about as much more, because 
most products are bought and sold several times before 
reaching their final destination. If these finance philos ¬ 
ophers could tolerate theory at all. they would certain¬ 
ly demand a volume of currency equal to the whole 
volume of annual exchanges, which is probably not far 
from $30,000,000,000. With such currency there would 
be no more difficulty about moving the crops, and no 
more silent factories and idle workingmen. Everybody 
would have plenty to do in carting “money” from place 
to place, even if there should not be much of anything 
else to do. It would then take more cars and engines 
to haul the “money” than the money’s worth. 

An Illinois farmer lately complained that he cannot 
sell his farm. All his neighbors want to buy it, but 
they have no money to pay for it. Therefore he wants 
more greenbacks struck off, so that they may get 
plenty of currency. "But, why don’t your neighbors 
sell their corn, and buy your property with the pro¬ 
ceeds 1 ” “They want it for other purposes.” “Then 
how could they get the new greenbacks if these were 
issued ?” The inflationist has found no answer to that 
conundrum yet. 


The Financial Record is published by the Finance De¬ 
partment of the American So tal Science Association, at 
their offices in New York and Boston. All com ti unication* 
respecting it may be addressed to the Secretary of the Asso¬ 
ciation, F. B. Sanborn, No. 5 Pemberton Square, (Room 21,, 
Boston; and all exchange papers, public documents, etc., mav 
be forwarded to the same address. 







































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FINANCIAL RECORD. 

“ WE NEED ONE THING BESIDES MORE MONEY, AND THAT IS BETTER MONEY .”—Senator Each. Chandler. 

VOL. I. • THURSDAY, MARCH 19, 1874. NO. 7. 


The Financial Record will be published weekly three ] 
months, and may be continued beyond that period. It will 1 
be, as its name indicates, a record’ of facts and opinions on I 
the questions of National Finance which are now so impor- | 
taut to the American people; and all persons,editors or others, ! 
to whom it is sent, are invited to use it freely, and to copy from 
it without hesitation if they see lit. It will be sent free of ' 
postage, to all persons who will remit 50 cents to the publishers 
at No. 5 Pemberton Square, Boston. All editors who may re¬ 
ceive it are invited to send their papers in exchange. 


Spirit of Congress. 

CORRESPONDENCE OF THE RECORD. 

Washington, March 18, 1874. 

The death of Mr. Sumner has made the past week 
a very dull one as regards all matters of general legisla¬ 
tion. That event has besides a direct influence on the 
currency question. In the first place, Mr. Sumner was 
always an advocate of honest money. Even at the 
critical period early in the war, when the legal tender 
hill was before the Senate, and when it was almost un¬ 
patriotic for a member to oppose any plan to provide 
ways and means to prosecute the war, he raised the 
voice of warning. On the day the bill was passed by 
the Senate, (Feb. 18, 1862), he said: 

“Power of all kinds is always liable to abuse, and ex¬ 
perience shows that the power to issue inconvertible 
paper is no exception to this prevailing law. The is¬ 
sue may have been moderate at first, and sustained by 
plausible reasons, but it has soon broken into excess. 

. . . Inconvertible paper, even when made a legal 
tender, has no actual value, and it circulates only be¬ 
cause government commands its circulation.It 

is clear, therefore, that all ordinary checks to an undue 
issue of money are wanting in such a case. There is 
nothing to present excess and consequent depreciation; 
and this danger is verified by history.” 

Mr. Sumner did not, however, vote against the bill. 
“Reluctantly, painfully,” he said, “I consent that the 
process should issue.” Since the war closed he has 
been steadily and consistently in favor of every step to¬ 
wards specie payments. In his death, therefore, the 
cause of good money los»s not merely a vote (which 
in the present division of the Senate is a matter of some 
importance) but the cogent eloquence of the greatest ora¬ 
tor in the chamber. The election of a successor to Mr. 
Sumner may have an important bearing on the cur¬ 
rency question, but as it is to take place within the com¬ 
ing week it will be useless to discuss the question at 
this distance. 

Shortly before his death Mr. Sumner wrote this state¬ 
ment of his later views : 

“Mr. Sumner consented with great reluctance to the 
original measifre suspending specie payments, and he 
has been always for the earliest practicable resumption. 
The possibility of a new issue of inconvertible paper he. re¬ 
gards with amazement and anxiety, and, in his judgment, such 
an issi/k would be a detriment and a shame. 

Two or three facts will strike the observer who comes 
here to discover what will probably be done with the 
currency at this session: (l)That members generally 
are weary of the discussion ; (2) that no inconsiderable 
number of those who will vote for expansion are satis¬ 
fied that the result^ will disappoint the advocates of 
the several schemes ; but they will vote for inflation to 
meet a supposed wish on the part of their constituents ; 
(3) that the weight of legislative experience and ability 
is greatly on the side of honest money, the inflationists 
consisting of a few sincere and able men with a crowd 
of foolish followers; and (4) that the opponents of in¬ 
flation ai e so numerous, so earnest and so united, that 
if they stand firm and fight the battle with good tac¬ 
tics, they can prevent any expansion. It is probably 
useless to hope for positive action towards specie pay¬ 
ments, and therefore while it would be unwise to coun¬ 
sel any abatement of vigor in arguing in favor of hard 
money, the chief effort is to defeat mischievous legisla¬ 
tion, which can almost certainly be done. 

Mr. Logan resumed the financial discussion in the 
Senate yesterday. He attributed the earnestness in the 
Eastern States in favor of specie payments to selfish¬ 
ness, but was unable to understand why Mr. Schurz, 


representing a Western State, should be of the same 
way of thinking. He showed much inability to com¬ 
prehend the difference between capital and currency. 
For example he said that the reason we sold our rail¬ 
road bonds in Europe was that we ourselves had not 
money enough; and he evidently supposes that if we 
print more money we can then build railroads without 
applying to Europe for loans. There were few striking 
points in the speech, which, as an answer to Senator 
Schurz, was a melancholy failure. 

There was a sharp contest in the Senate this after¬ 
noon on the question of continuing the financial discus¬ 
sion, resulting in a decision to go on with it. The only 
speech made was by Senator Davis (W. Va.,) who op¬ 
posed an increase of national bank notes and advocated 
the propositions to transfer currency from the East to 
the West and South. Failing in this he is in favor of 
an increase of greenbacks rather than of bank curren¬ 
cy. No decision can be reached by the Senate before 
the middle of next week. * 

Tlie Newspapers For and Against Infla¬ 
tion. 

We present this week a statement of the position of 
the most influential newspapers in the country on the 
currency question; but, we hardly need say, it is not 
a complete list, even of leading newspapers. Where 
papers seem to be on both sides they have been omit¬ 
ted altogether, in other cases an expression of opinion 
has not met our eyes. The list, as will be seen, in¬ 
cludes mostly daily papers in the larger cities : 

NEW ENGLAND. 

For inflation. —None. 

Against inflation.— Bangor Whig, Portland Press, Portland 
Argus, Portland Advertiser, Boston Post Boston Journal, Bos- 
to . Herald, Boston Globe, Boston Transcript, Boston Adver¬ 
tiser, Worcester Spy, Worcester Gazette, Springfield Republi¬ 
can, Springfield Union, Providence Journal, Hartford Courant, 
New Haven Palladium, and many others. 

NEW TORN AND MIDDLE STATES. 

For inflation. —Philadelphia Press, Pii'ladelphia North Amer¬ 
ican. 

Against inflation.— New York Times, New York Tribune, 
New York Herald. New York World, New York Journal of 
Commerce, New York Express, New York Commercial Adver¬ 
tiser, New York Evening Post, New York Mail, Albany Jour¬ 
nal, Troy Times, Troy Whig, Rochester Democrat, Buffalo 
Commercial Advertiser, Buffalo Express, Newark Advertiser, 
Philadelphia Ledger, Pittsburg Commercial, Baltimore Ameri¬ 
can, Baltimore Gazette, Washington Chronicle, Washington 
Republican. 

SOUTHERN STATES. 

For inflation. —Richmond Whig, Richmond Enquirer,'Rich¬ 
mond State Journal, Wilmington (N. C.) Journal. 

Against inflation. — Savannah Republican, Memphis Ava¬ 
lanche, New Orleans Picayune. 

WESTERN STATES. 

For inflation. — Cincinnati Enquirer, Indianapolis Journal, 
Chicago Inter-Ocean, St. Louis Globe, St. Louis Democrat. 

Against inflation.— Cincinnati Gazette, Cincinnati Commer¬ 
cial, Indianapolis Evening News, Cleveland Leader, Colum¬ 
bus State Journal, D troit Tribune, Detroit Post, Detroit Free 
Press, Chicago Tribune, Chicago Time«, Chicago Journal, Du¬ 
buque Times, Milwaukee Wisconsin, St. Louis Republican. 

PACIFIC STATES. 

For inflation.— None. 

Against inflation.— San Francisco Alta, San Francisco Bul¬ 
letin, Sacramento Record. 

On no other great public question have the leading 
journals ever been so united as on this. We have 
named above seventy newspapers from twenty-one 
States and the District of Columbia. Only eleven, rep¬ 
resenting seven States, are for inflation, while fifty- 
nine representing eighteen States, are against any 
expansion. And in this list are a majority of the great 
papers of the country. 


The Workingmen and the Currency. 

An Indiana newspaper, circulating among the me¬ 
chanics and laboring men of that State, prints a com¬ 
munication from one of its subscribers, a mechanic, 
who has not yet learned that there can be too much pa¬ 
per money. His communication recalls to mind the 
"shinplaster” time of Jackson and Van Buren, when 
for a while, the same notions prevailed until the crash 
of 1837 brought people to their senses. “Mechanic’’ 
writes,— 

To-morrow I have taxes to pay. Anything that the 
tax gatherer will take will answer me just as good as 


gold. Give us greenbacks, National Bank money, 
State Bank money, or city script, or anything else that 
will pay taxes, pay doctor’s bills, buy bread and meat, 
that will keep me from begging or my family from 
starving! That’s what we want, we can’t eat gold. 
A piece of tin would answer the same purpose to a 
hungry man if he could not buy bread. We want Un¬ 
cle Sam to make money so plenty that it can’t be all 
locked up. Then capitalists will lend at a fair per cent; 
our factories can then get money to go to work; our 
citizens then can borrow money to build with; our 
rperchants can get their customers’paper discounted, 
and we can aU seU our plunder, and everything will be 
lovely again. 

To this the editor responded as follows :— 

Our correspondent makes the common mistake of 
confusing depreciated and irredeemable paper with 
money. He wants more money to buy groceries with, 
to pay doctor’s bills with and to save up. « Most people 
are afflicted in the same way. We would not object to 
a little more money ourselves. But can “Mechanic” 
tell how an inflation ot the currency will give him 
more money ? No one will give it to him for nothing, 
he will have to work for it, just as he does now, just as 
we all do. An inflation will depreciate paper more than 
it is now, and immediately the prices of groceries and 
dry goods and doctor’s bills will go up. Will “Mechan¬ 
ic’s” wages go up too 1 Not immediately. HewiUfind 
that they will not be affected for months after every¬ 
thing else has been touched, and in the meantime he is 
getting the old price for what he does and paying the 
new price for what he buys. If he has money owing 
to him he will find that it will not buy as much, is not 
worth as much to him as it is now. And after the coun¬ 
try has again “grown up” to the level of these infla¬ 
tions, as the speculators say it will, then there will 
either be another inflation with the same result or an¬ 
other panic and contraction. Then “Mechanic’s” 
wages will be the first thing to go down, perhaps his 
work will stop entirely, and his candle will be burned 
at both ends. But suppose his wages keep pace in rise 
and fall with the prices of all necessaries. Suppose he 
gets two dollars and half where he now gets two dol¬ 
lars. Is he any better off if he has to pay the two dol¬ 
lars and a half for the same things he now gets f<v two 
dollars 1 On the contrary he will find things worse, for 
an expanded currency always gives the opportunities 
of gain to the rich and grinds the poor; where dollars 
have small purchasing power, the man who has few of them 
fares ill. The currency for the people is the one in which the 
cents count, in which a quarter will bug something worth having. 

Mr. W. C. Flagg, a leading Granger, in a speech at 
Carlin8ville, Ill., on the 2d inst, said,— 

Lfeel that the producing classes of this country are 
being used by those whose interest is not for their inter¬ 
est, to renew the gold gambling of Wall Street, and in¬ 
flate anew the railroad schemes of speculative finan¬ 
ciers. The engraver and the printing press can never 
make this nation rich. Labor must make money, as it 
does all other wealth, by earning it; and then it will 
have equal value over the civilized world, and make 
the service of one man count fairly and at its worth 
against the service of another, and the only money 
that costs and means labor is gold, silver or some arti¬ 
cle promising value in itself, or a certificate represent¬ 
ing that value. • 

The Savannah (Geo.) Sunday Herald says,— 

The laboring class would suffer by inflation, as an 
increase in the volume of currency will make it more 
fluctuating, and the laboring class is exposed to most loss 
by depreciation—prices falling for the laborer latest and 
rising soonest, while wages fall soonest and rise latest. 
When the day of payment comes, in case of an increase, 
we must bear our portion of the additional burden, 
and will then, like Dr. Franklin, think that we have paid 
too dearly for the whistle. 

Daniel Webster on Paper Money. 

In 1815 Daniel Webster, then a young member of 
Congress from New Hampshire, said in a speech in the 
House,— 

Whenever bank-notes are not convertible into gold 
and silver at the will of the holder, they become of less 
value than gold and silver. All experiments on this 
subject have come to the same result. The deprecia¬ 
tion may not be sensibly perceived the first day, or the 
first week, it takes place. It will first be seen in what 
is called the rise of specie; it will next be seen in the 
increased price of all commodities The circulating 
medium must be something which has a value abroad 
as well as at home, and by which foreign as well as do- 




































14 


THE EIHAHCIAL RECORD. 


mestic debts can be satisfied. The precious metals 
alone answer these purposes. They alone, therefore, 
are money, and whatever else is to perform the offices 
of money must be their representative, and capable ot 
being turned into them at will. So long as bank-paper 
retains this quality, it is a substitute for money ; divest¬ 
ed of this, nothing can give it that character. No so¬ 
lidity of funds, no sufficiency of assets, no confidence 
in the solvency of banking institutions, has ever ena¬ 
bled them to keep up their paper to the value of gold 
and silver any longer than they paid gold and silver 
for it on demand. 

In the next year, 1810, he made another speech in 
which he said,— 

Wars and invasions are not always the most certain 
destroyers of national prosperity. They announce 
their own approach, and the general security is pre¬ 
served by the general alarm. Not so with the evils of 
a debased coin, a depreciated paper currency, or a de 
pressed and falling public credit. Not so with the plaus¬ 
ible and insidious mischiefs of a paper-money system. These 
insinuate themselves in the shape of facilities, accom¬ 
modation, and relief. They hold out the most falla¬ 
cious hope of an easy payment of debts, and a lighter bur¬ 
den of taxation. 

In 1833, as a Senator of Massachusetts, Mr. Webster 
said in a speech,— 

We are in -danger of being overwhelmed with irre¬ 
deemable paper, mere paper, representing not gold 
nor silver ; no sir, representing nothing but broken prom¬ 
ises, bad faith, bankrupt corporations, cheated creditors, and 
a ruined people. 

In a speech made in 1836 he said,— 

If we wish to restore the public credit and to re-es¬ 
tablish the finances, we have the beaten road before 
us. All true analogy, all experience, and all just 
knowledge of ourselves and our condition, point one 
way. A wise and systematic economy, and a settled 
and substantial revenue, are the means to be relied on ; 
not excessive issues of bank notes, a forced circula, 
tion, and all the miserable contrivances to which politi¬ 
cal folly can resort, with the idle expectation of giving 
to mere paper the quality of money. These are the in¬ 
ventions of a short-sighted policy, vexed and goaded by the ne¬ 
cessities of the moment, and thinking less of a permanent rem¬ 
edy than of shifts and expedients to avoid the present distress. 
They have been a thousand times adopted, and a thou¬ 
sand times exploded as delusive and ruinous, as de¬ 
structive of a.l solid revenue, and incompatible with 
the security of private property. 


The Peddler’s Prayer. 

New York, March 18, 1874. 

To the Editor of the “Financial Record.'’ 

The surprise to see a Parsee letter in the Financial 
Record will, in my opinion, be less than at the lack of 
one. But a Parsee letter without an anecdote, parable 
or fable would be considered stale; and I will not 
omit the custom of my people. The good people of 
this country, or rather the wire pullers on their behalf, 
are clamoring for more paper money. Well, then, I 
cannot do better then tell them an anecdote current in 
India, which is as pertinent to the case as an egg is to 
an omelet. Many years ago there lived an old Moham¬ 
medan in Delhi, by trade a Bori or peddler, who carried 
a heavy load of coarse goods every morning from Delhi 
to the neighboring villages, for sale, thus earning a 
precarious livelihood for himself and his family. It is 
no joke to carry seventy or eighty pounds of coarse 
cotton stuffs on one’s back under an Indian sun, and so 
the poor Bori found it. This old man was a pious 
Moslem, and one day sweating undef his heavy load, 
he looked up to the cloudless sky and thus spoke, “0 ! 
Allah, I have been thy faithful servant on earth; I 
know that Paradise and a fair amount of houris will be 
my portion ; yet I would ask a small installment of 
favor in this world. All I desire from thee, 0 Allah ! is 
a little horse to carry my heavy pack. I care not how 
little it is, but hear thy faithful servant, and do thou, 
0 glorious Prophet! intercede for a poor man and”— 

Here he was suddenly interrupted in his prayer by 
shouts some hundred yards off, of “Bori! Bori! come 
here !” Quickly wending his way towards the callers, 
he found one of the young Princes of Delhi, who had 
that morning driven out with a splendid pair of blood 
mares, small and fiery, as only Arab mares can be. One 
of the mares was followed by a little colt, not more 
than seven days old, a perfect picture of grace, no big¬ 
ger than a calf. This little creature, stepping on a 
rolling stone, had injured its little foot and was lamed. 
The Prince, anxious to get his colt home, and seeing 
the Bori, had conceived the idea of making the peddler 
carry the colt to his stables. A Moslem Prince in In¬ 
dia in those days, only had to speak to be obeyed. He 
graciously had the peddler’s pack put into his carriage, 
helped his servant to put the colt round the Bori’s neck 
and told him to carry it to the royal stables, three miles 


away. As soon as the Bori was left alone and found 
words, he once more tried, as well as he could, to look 
up to heaven and thus cried out: “0, Allah, thou hast 
mistaken my prayer! True, thou hast given me now a 
little horse, but the horse I prayed for was to carry me, 
and behold thou hast given me a horse which I have to 
carry.” 

Now many good people in this country, like the 
Bori of Delhi, cry and pray for more paper money, 
to them it seems the only horse that can carry them 
and all their financial troubles. Beware, 0 my friends i 
the increase of paper money will be a little horse sure 
enough. But it will be you who will have to carry the 
horse, instead of the horse carrying you. Unawares 
you already carry a big horse; your paper currency 
costs you at present 12 per cent more than its face value; 
and as you need nearly 800 million dollars to pajr for 
foreign commodities and duties, it naturally follows that 
you yearly carry fully ninety-six millions of dead horse 
in premiums. But if you add another fifty or one hun¬ 
dred millions to this dead carrion, the premium will 
rise to 20 per cent, and then this very little horse that you 
pray for and which you believe will make you all rich, 
will cost you an additional sixty or seventy millions. 

I could pursue this simile much farther, but my eyes 
at this moment fall on the diminutive little horse ( The 
Recm-d,) that has to carry my Parsee letter, and I am 
warned not to over-load him. 

I remain, therefore, yours, very sincerely, 

Adersey Curiosibhoy, 

Parsee Merchant of Bombay. 


The Paper Money Nations. 

They are making efforts much more vigorous than in 
the United States, to resume specie payment in the pa¬ 
per-money countries of Europe,—France, Russia, Aus¬ 
tria and Italy. France is almost in condition to re¬ 
sume, her currency being, as stated below, along with 
Germany and England, made up in these proportions: 

Silver. Gold. Paper. 

France.$300,000,000 $ 800,000,000 $542,953,801 

Germany. 480,000.000 296,000,000 210,207,408 

England. 60,000,000 500,000,000 200,000,000 

Total $840,000,000 $1,596,000,000 $953,161,209 

The United States have nearly as much paper in cir¬ 
culation as the other three great nations. They have 
about 6 per cent as much gold, and 1 1-4 per cent as 
much silver, of both which metals they are producers. 
France has half as much paper as coin, and the paper 
is nearly at par. The United States have eight times 
as much paper as gold and keep sending $65,000,000 of 
metal, annually produced here, to Europe, and then 
complain they have not enough to use themselves. 
France is now coining silver at the rate of $25,000,000 
per annum, or about the Nevada production. Austria 
and Russia are also large buyers, while Germany is the 
seller, having but one standard, that of gold. France 
holds $1,100,000,000 of the precious metals, after pay¬ 
ing Germany $1,000,000,000 indemnity. Tire United 
States have borrowed abroad, on bonds, $1,500,000,000, 
and l\ave only 10 per cent of the specie held by France. 

In this connection we find some pithy remarks in 
a late number of the New York Tribune. 

WHAT IS A DOLLAR ? 

The only constitutional dollar is 23 and 1-5 grains of 
pure gold—the gold itself, not the promise to pay it. 
The stamp impressed by the Government is simply for 
the purpose of guaranteeing the weight and fineness of 
the metal. Our paper promises to pay dollars will only 
exchange for 21 grains of pure gold, and therefore are 
depreciated. The cause of the depreciation is the exces¬ 
sive quantity of paper issued. Diminish the paper and 
you will increase its value ; increase it and the discount 
will become greater than it is. As to the growth of the 
country in population and wealth, the case of Great 
Britain is a sufficient demonstration that the quantity 
of money in circulation need not necessarily increase 
with either. That country is certainly four times as 
wealthy and twice as populous as it was in 1810, yet 
there has been but a trifling change in the bank-note 
circulation, and no augmentation of specie at all corre¬ 
sponding to the increase in wages, population, trade, 
and wealth. 


Words from the West. 

A correspondent with good opportunities for observa¬ 
tion writes us from Nebraska, ‘ The money question in 
the West has been looked into and more satisfactorily 
pondered than any person, six weeks ago, would have 
hoped. It is nearer a righteous, popular judgment than 
the Railroad question to-day.” 

Another correspondent, in Southern Illinois, writes 
as follows: “Most of the workingmen’s associations 
and many of our Farmers’ organizations have been, by 
the active efforts of friends of inflation, indoctrinated 


with the views of Kellogg, Campbell, Day and others 
who propose to make money cheap by printing plenty of 
it. A letter from Prof. Amasa Walker, which appeared 
in the Prairie Farmer of March 7, I think may do some 
good. In an address at Carlinsville,last week Mr. W. C. 
Flagg incidentally argued the currency question, and 
it is said that he will soon treat of it at some length. 
I read last night the speech of Carl Schurz, (his Marco 
Polo talk) in which he seemed to succeed well in ex¬ 
posing some of the fallacies of his opponents.” 


Put the Gold at Hard Labor for Life. 

It is perfectly true, that our debased legal tender 
has driven the stock of gold out of the country. We 
have not the precious metals on which to resume in full, 
and to call them here would disturb all the exchanges 
of the world. It only remains then to make what we 
have got do the utmost possible amount of w r ork. We 
must and can utilize every dollar of it. This we can 
easily do by concentrating it in one reserve, and that 
reserve the national Treasury. This will be effected 
instantly that Treasury notes are made a legal tender 
everywhere, except at its own counter—the specie re¬ 
serve would be behind that counter, and against it, in 
fixed and well understood proportions, the notes would 
be issued. If, however, these notes were not legal ten¬ 
der at every counter but its own, then in periods of 
stringency every bank would be thrown back on its 
own reserve of gold, and the present maintenance of 
specie payment would indeed be practicably impossi¬ 
ble. In other words, we can by no possibility make 
the slender stock of specie, now at our command do 
the work it must do, if we even attempt to resume, ex¬ 
cept by so concentrating it that every dollar will do as 
much work as a dollar can, or as five now do. 

C. F. Adams, Jr. 


Spirit of the Press. 

[From the Indianapolis Evening News.] 

Some of our home inflationists have gone down hill 
so rapidly that they now declare in favor not only of 
further issues, but of a depreciated currency. One of 
them said yesterday, “I never want to see specie pay¬ 
ments again;” another said, “I want the currency to be 
depreciated, it is better for me.” Both were rich men, 
both expect to profit by a fluctuation of values. If 
there is any thing that will corrupt morals faster than 
another, it is a depreciated and irredeemable currency ; 
it is injurious to all branches of business, and to all men. 
But laying that aside, it is a bad sign to see men who 
were once “hard money Democrats,” and who still are 
contending in favor of what they call “Democratic 
principles,” advocating a course destructive to national 
morals, as well as private integrity. The rich men, the 
keen traders, can, perhaps, afford to keep a depreciated 
currency, but the people cannot. It will grind the 
poor between the upper and nether millstones. 

[From the N. Y. Evening Post.] 

Our currency is the creation of the wmr. Its amount 
was accidental. It had no relation to the wants of a 
time of peace. It was measured only by the necessities 
of war expenditure. Nominal valuations have, indeed, 
adjusted themselves to it, as they always do to a facti¬ 
tious currency, whatever its amount; whije, on the other 
hand, a sound currency always adjusts itself to real 
values. When valuations have once filled the measure 
of a law-made currency there is alwavs a demand for 
more. If the war, and subsequent legislation, had left 
us with 800 millions of irredeemable national and bank 
notes instead of 700 millions, the same imperious call 
would come up from the West. Valuations would 
still have responded to the measure which Congress 
had created. The difference would be that a barber’s 
shop on Fifth avenue that now rents at only $10,000 
per annum, would have been cheap at $12,000, and a 
city lot on the prairies would have been worth possibly 
20 per cent more than it is to day. 

[From the Chicago Tribune.] 

How can a man, who wishes to sell property for any 
other purpose than to pay a debt, be benefited by in¬ 
flation'? His price must be inflated at least as fast as 
the currency is, so that it will be as difficult to close a 
bargain when gold is at 200 as when it is but 110. We 
have made one exception. When a man needs curren¬ 
cy to pay a debt, inflatii n allows him to legally rob his 
creditor. He can pay him the dishonored and depreci¬ 
ated promissory notes of the country at their face 
value. The more the currency is inflated, the greater 
will be the depreciation of the nominal dollar, the 
easier will be the getting of it, until the resulting crash 
comes, and the greater will be the robbery of creditors 
which our law allows. 


The one thing which we cannot afford to do is to try 
to get on with a depreciated money. It is impoverish¬ 
ing us. It is disgracing us. It is demoralizing us. It 
is unmanning us.— Prof. Perry. 
























THE FINANCIAL RECORD. 


15 


CARL SCHU11Z. 

His Second Great Speech on the Currency. 

SPOKEN IN THE U. S. SENATE FEB. 24, 1874- 

[Abridged from the official Report.] 

I. The Question Stated. 

Mr. President: —It will be observed that the de¬ 
mand made at present by those who desire an expan¬ 
sion of the currency falls far short of what it originally 
was. It may fairly be assumed that, if we adopt the 
present proposition, it will serve merely as an enter¬ 
ing-wedge. I had hoped that from the confused jumble 
of propositions and counter-propositions with which this 
bill had been encumbered, nothing would issue that 
might be seriously detrimental to the best interests of 
the country. That hope has been turned into some¬ 
thing like apprehension, and I feel it my duty now to 
submit some observations to the Senate. 

The Senate has been during these weeks of debate, 
presenting a most extraordinary spectacle. In the sec¬ 
ond half of the nineteenth century, with the uniform 
experience of ages before us, in a period of profound 
peace, with no public dangers pressing upon us the ne¬ 
cessity of exceptional measures, with ample resources 
to defray the expenses of the Government and to de¬ 
velop the resources of the country, the highest legisla¬ 
tive body of this Republic, which is proud of calling 
itself the most progressive state of the world, is seri¬ 
ously debating the question whether new issues of ir¬ 
redeemable paper money shall not be resorted to in 
order to promote the prosperity of the nation; and 
such an almost incredible proposition is supported by 
arguments which will make the civilized world stare it 
they ever become widely known beyond these pre¬ 
cincts. It has actually been asserted in this body that 
the precious metals can no longer remain the standard 
of value in any country . Why 1 ? Because the aggre¬ 
gate quantity and value of the precious metals in exist¬ 
ence do not equal in value the aggregate amount of 
all the products of industry’ and agriculture; an idea 
just as original and as luminous as it would be to say 
that a yard stick cannot remain a standard measure of 
length because a yard-stick is not as long as a roll of 
cloth or carpet whose length is to be ascertained, or 
because all the existing yard sticks in the world put to¬ 
gether would not have the same length as all the ob¬ 
jects whose length is to be measured. 

We have been gravely told that conclusive proof of 
the insufficiency of the amount of currency in this 
country is furnished by the fact that England and 
Erance have a larger volume of currency than we have, 
and that there are many people in the country who 
cannot get all the loans and all the discounts which 
they desire. We have heard it asserted that an irre¬ 
deemable currency must be a good thing after all, be¬ 
cause there are three countries in Europe—Austria, 
Russia and Italy—whose economic development lias 
been somewhat rapid of late, while those countries 
have an irredeemable paper currency. Nobody who 
knows anything about those countries can be ignorant 
of the fact that the sudden development referred to has 
been brought about by great and beneficent changes in 
their political and social organization, setting free and 
putting to work all the productive forces of society, and 
that the leading statesmen of those countries are day 
and night racking their brains to find means by which 
to get rid of that curse of an irredeemable paper 
money which is here represented as the very source of 
prosperity. And I would say to the Senator from In 
diana, (Mr. Morton,) who advanced that propposition 
here, that if we should hold up to those leading states¬ 
men their irredeemable currency as an element of 
progress, they would receive the assertion with a 
melancholy smile of derision. 

We have been assured here that a sufficient issue of 
irredeemable paper money will make money as easy in 
Georgia as it is in England; and that the rates of inter¬ 
est will go down as the quantity of irredeemable cur¬ 
rency increases. It has been asserted, in an endless 
variation of forms, that currency and capital are ma¬ 
terially the same thing. But the very climax is reached 
when we are told that such doctrines, a hundred times 
exploded as hollow fallacies by the experience of cen 
furies, are in reality the most progressive ideas of this 
age; that this is the age of railroads and telegraphs; 
that society is transformed; and that the notion of the 
precious metals remaining the standard of value and a 
medium of exchange is one of those obsolete ideas 
which only old fogies will adhere to. 

II. The Chinese Greenbacks. 

Sir, let us examine a little into the progressive char¬ 
acter of these ideas. Here in my hand I hold an edition 
of Marco Polo’s Travels, showing that this progres¬ 
sive idea prevails in China many centuries ago; and ’’ 
think it will be instructive to the Senate to learn how 
much of this progress of ideas lies already behind us. 

Marco Po o tells the following story : 

Now that I have told you in detail of the splendor of this city 
of the Emperor’s, I shall proceed to tell you of the mint which 


I he hath in the same city, in which the he hath his money coined 
and struck, as I shall relate to you. And in doing so I shall 
make manifest to you how it is that the Great Lord may well' 
be able to accomplish even much more than 1 have told you or 
am going to tell you in this book. For, tell it how I might, you 
never would be satisfied that 1 was keeping within truth and 
rtason! The Emperor's mint, then, is in this same city of Cam- 
baluc, and the way it is wrougt is such that you might say he 
hath the secret of alchemy in perfection, and you would be 
right! For he makes his money after this fashion: 

He makes them take oft' the bark of a certain tree, in fact of 
the mulberry tree, the leaves of which are the food of the silk¬ 
worms; these trees being so numerous that whole districts are 
full of them. And this they make into something resembling 
sheets of paper but black. When these have been prepared 
they are cut up into pieces of different sizes. The smallest of 
these sizes is worth a half tornesel, the next, a little larger, two 
tornesel; one, a little larger still, is worth half a silver groat of 
Venice; another a whole groat; others yet two groats, five 
groats, and ten groats. There is also a kind worth one bezant 
of gold, and others of three bezants, and so up to ten. All these 
pieces of paper are issued with as much solemnity and authority 
as if they were of pure gold or silver; and on every piece a variety 
of officials, whose duly it is, have to write their names and to 
put their seals. And when ali is prepared duly, the cuief officer 
deputed by the Kaan smears the seal intrusted to him with Ver¬ 
million, aud impresses it on the paper, so that the form of the 
seal remains stamped upon it in red; the money is then authen¬ 
tic. Any one forging it would be punished with death. And 
the Kaan causes every year to be made such avast quantity of 
this money, which costs him nothing, tnat it must equal in 
amount all the treasure in the world. With these pieces of pa¬ 
per, made as I have described, he causes all payments on his 
own account to be made; and he makes them to pass current 
universally over all his kingdoms aud provinces and territories, 
and whithersoever his power and sovereignity extends. And 
nobody, however important he may think himself, dares to re¬ 
fuse them on pain of death. 

So you see they understood then the art of how to 
make paper money a legal-tender ! 

And, indeed, everybody takes them readily; for wheresoever 
a person may go throughout the Great Kaan’s dominions he 
shall find these pieces of paper current, and shall be able to 
transact all sales and purchases of goods by means of them just 
as well as if they were coins of pure gold. Now you have heard 
the ways and means whereby the Great Kaan may have, and 
in fact has, more treasure than all the kings in the world; and 
you know all about it and the reason why. 

Yes,wedo know the reason why; andknow something 
of it from our own experience. Now,sir,the first issues 
of paper money, as they are traced in the history of 
China, are as old as the beginning of the ninth century 
of this era; something over a thousand years. When 
the system had prevailed a certain period, it was found 
that the paper money became more and more worthless ; 
then new issues were made to take up the old ones, 
and one piece of the new issue was exchanged for five 
of the old ones; thus making a settlement on the basis 
of 20 per cent., the people losing 80 per cent. We are 
informed that such proceedings were twice repeated, and 
probably a number of such settlements were made of 
which no knowledge has reached us ; so that while the 
Great Kaan grew rich, the people grew poorer and 
poorer. 

Then under the Minck dynasty the government found 
still another method of more efficiently turning the sys¬ 
tem to the advantage of the ruler; for the government 
paid in paper, but took only its dues in the precious 
metals; and he who who would not obey its behests 
was put to death. The paper money depreciated to al¬ 
most nothing; and the whole “progressive'* system 
finally broke down. As Marco Polo would say, “You 
know the reason why.” I need not go througji the 
whole history of paper money in Asia to show that the 
progressive idea of superseding the precious metals 
with paper money, and especially with an irredeemable 
paper money, was discovered and tried there ; and that 
the progressive gentlemen who reiterate the same idea 
as a new discovery are as progressive as the Chinese 
were over a thousand years ago. 

III. Modern Experiments. 

But, sir, the same progressive idea which was tried 
and exploded here was discovered by the great Scotch 
financier, Law, once more, at the beginning of the eigh¬ 
teenth century, with the same success. Law carried it 
to the full extent of its progressiveness, and had to flee 
for his life after the bubble had collapsed. Tried and 
exploded again! Then we had the French assignats. 
The country was made immensely rich; there were 
pieces of paper money enough to cover all. the land, and 
to wrap up all the articles bought and sold. Then the 
collapse came; and at present you find them as wall¬ 
paper covering the cottages of French peasants,to serve 
as warning examples. Tried and exploded once more! 

We had our own continental money, the history of 
which is familiar to you. Tried aud exploded again! 

And now, after all these teachings of history, the 
same progressive ideas appear as something new in the 
Senate of the United States. But, sir, when these same 
fallacies, so hoary with age and so overshadowed with 
the condemnation of experience, are still repeated again 
and again in the Senate of the United States, in spite 
of overwhelming refutation on the spot; when they 
still seem to be believed in by some; and when.finnally 
the venerable Senator from Pennsylvania [Mr. Came¬ 
ron] rises and tells us that the very fact of the abun 
dance of money in the great centers at the present mo¬ 
ment is conclusive proof that there is not enough of it 
in the country, and when the same Senator tries to make 
us believe that by voting for inflation we shall, with 
him, make war upon the monopolists and the wicked 


speculators and money-changers, then, sir, I may be 
pardoned if at this late stage of the debate I come for¬ 
ward once more to speak of first principles. 

IY. Is the Currenct Insufficient? 

I desire to show, first, that the gentlemen who favor 
an expansion of the currency labor under an essentially 
erroneous conception of the nature of the difficulties for 
which they want to provide; and, secondly, that the 
remedies which they propose will not effect a cure at 
all, but will rather aggravate the evil. 

The assumption that the volume of our currency 
falls short of the actual requirements of legitimate bus¬ 
iness forms the basis and the only basis of all the ar¬ 
guments that are made herein favor of expansion. Is 
that assumption correct? I deny its correctness. In 
the first speech that I made on this subject, I stated a 
principle which furnishes a test. I said, assuming that 
the people have confidence in the Government issuing 
an irredeemable currency, that currency will not neces¬ 
sarily depreciate or stand at a discount as to gold, as 
long as it simply supersedes and does not exceed in 
volume the gold and silver, and the bank currency 
based upon gold and silver, which formerly sufficed to 
transact the business of that country; but, the condi¬ 
tion ot confidence remaining the same,the irredeemable 
currency will depreciate, will be at a discount as to gold, 
as soon as its volume exceeds that quantity. When 
such depreciation steadily continues, under the same 
conditions of confidence, it is a sure sign that the 
volume of currency is in excess of the real requirements 
of the legitimate business of the country. I ask the 
question, if our currency were insufficient, would it 
have been possible for the general prices of commodi¬ 
ties to remain so long at the high inflation point at 
which they have stood for years ? If really the 
amount of currency were so insufficient as to impede 
the necessary transactions of the business of the coun¬ 
try, is it not certain that the gold in the country, which 
is now hiding itself, would have been driven out of its 
hiding places to fill the vacuum occasioned by the in¬ 
sufficiency ? 

The proposition has remained absolutely unanswered. 
Indeed, very ingenious efforts have been made to ob¬ 
scure the question. Senators have tried very hard to 
shed a brilliant flood of darkness upon this subject, 
and in a measure they have succeeded. have been 
told that in France and in England the volume of cur¬ 
rency is much larger than here, although neither the 
population nor the extent of the country equals ours. 
That may be true; but I ask what are the circum¬ 
stances determining the volume of currency necessary 
for the real requirements of the business of a country ? 
Is it area ? Is it extent of t<frritory ? Is it the num¬ 
ber of square miles? Why, sir, look at all the new 
territories of the United States, and there is not a man 
in this body who will assert that, large as they are, 
they all together combined would require for their 
business as much currency as the city of Boston. 
Therefore it cannot be area; it canDOt be extent of 
territory alone. Is it population ? Look at the whole 
interior of Africa, with its teeming millions of popula¬ 
tion, and I am sure the business of the whole interior 
of Africa does not require half as much currency as 
the single State of Rhode Island. Therefore it cannot 
be population alone. 

I ask then, is it the amount of productions, the num¬ 
ber of exchanges and of values involved ? But the 
same amount of production, the same number of ex¬ 
changes, the same values involved will require far less 
currency where there are superior facilities of rapid 
communication, of banking and clearing-house sys¬ 
tems, than where they do not exist. Neither of these 
elements alone, therefore, will determine the amount of 
currency which is necessary for the business of a coun¬ 
try, but all of them combined will. Of course I use 
the word “currency” here in the most restricted sense 
of the term, not including deposits, bills and checks, as 
some political economists justly do. 

But I am met with 4he assertion that in some sections 
of the country a scarcity of money is sometimes actu¬ 
ally felt by legitimate business. That has undoubted¬ 
ly been so at certain periods. I showed the other day 
by numerous and impartial market reports that in the 
business centers of the country money is at present in 
abundance, if not in superabundance. There has been 
much excited squirming about this fact on the part of 
the advocates of inflation, and attempts were made to 
deny it, but the evidence was so overwhelming that 
at last gentlemen took refuge in the assumption that 
this abundance of money in the business centers of 
the country was owing to the expansion of the cur¬ 
rency by the drafts that have been made upon the 
§44,000,000 reserve, and that assertion was put for¬ 
ward in a somewhat triumphant manner. A single 
statement will suffice to show its falsity. On the loth 
of February, 1873, the outstanding greenbacks amount¬ 
ed to $356,000,000, of which the banks in the three 
cities of New York, Boston, and Philadelphia, held 
§63,797,982. On the 16th of February, 1874, the out¬ 
standing greenbacks amounted to §381,327,327, of 
which the same banks in Philadelphia, New York, 
and Boston held §87,228,654. The currency had been 
inflated to the amount of $25,327,327, and three cities 













16 


THE FINANCIAL EEBORD. 


—New York, Bo ton, and Philadelphia—had absorbed 
the whole of the increase with the exception of $1,896,- 
645. This shows that the whole increase remained in 
three cities in the East. 

V. The Needs of North Carolina. 

The Senator from North Carolina, [Mr. Merrimon], 
having been quite prominent in this debate, I take his 
State as an illustration. He complains that in North 
Carolina the people are impoverished, that business is 
cramped, that banking capital is scarce, that rates of in¬ 
terest are high, and so on. All this is true. I sincere¬ 
ly sympathize with the Senator and his people, and he 
can scarcely be more anxious to do something to aid 
them than 1 am. We are entirely agreed as to the ob¬ 
ject; but now let us scrutinize the means. The Sena¬ 
tor wants more paper money for his people, and there¬ 
fore he advocates an expansion of the currency. At 
first he advocated an expansion of the legal-tender cur¬ 
rency, and I admit that would certainly be the most 
efficient means. Now suppose it w-ere made; suppose 
we issue one hundred or two hundred millions of our 
irredeemable legal-tenders, how will it operate ? Gen¬ 
tlemen speak as if the Government of the United States 
issuing an additional amount of paper money were at 
the same time issuing a proclamation to the country 
running somewhat in this way : “All ye who are weary 
and heavily laden, come to me that I may put money 
into your pockets; you, good farmer, have a mortgage 
on your farm and cannot pay it, here are the $2,000 you 
want; pay them back when you can. You, enterpris¬ 
ing manufacturer, want to extend your business and 
employ more workmen ; you want, say $200,000 or 
$300,000 ; you can have them immediately ; here they 
are. You, good merchant, want to carry on a larger 
trade and you are cramped by a want of means ; there 
is nothing in the world easier than to help you.” Gen¬ 
tlemen, this sounds extremely preposterous, and yet I 
assert there have been arguments made in the Senate of 
the United States which would apply only to such a con¬ 
dition of things, and there are thousands and thousands 
of people in the country who have been made to believe 
that an issue of additional currency would work in just 
that way. 

But let us see how it will operate in reality. There 
are only two methods of setting an additional amount of 
currency afloat. One is by defraying the running ex¬ 
penses of the Government. That will not apply here, 
because we can raise revenue enough for that purpose. 
The other is by the purchase of bonds of the United 
States in the market. That will necessarily have to 
be resorted to. What, then, will the Treasury do ? 
The Treasury goes to buy bonds where bonds are sold; 
that is to say, the Treasury goes to Wall Street. It car¬ 
ries this additional issue of currency there, and there it 
buys its bonds What is the consequence ? Theaddi- 
ticmal amount of currency is thrown at once into the 
very hot-bed of speculation. 

Now, sir. how will North Carolina, how will any other 
Southern State be benefited by an operation like this ? 
North Carolina will not get any share of the additional 
currency for nothing. North Carolina will have to buy 
that additional currency by offering her products in 
the market where that currency is distributed, just as 
North Carolina has to do now. She will have to buy 
that currency, just as she would have to buy that cur¬ 
rency if it were not paper but gold. If these products 
of North Carolina are in demand, they will be bought, 
and currency will go to North Carolina in payment 
thereof, as it does now, and only to that extent : no 
more. But the additional amount issued by the Gov¬ 
ernment being right in the hot-bed of speculation, and 
having greatly stimulated that speculation, the rule 
governing the diffusion of currency will be just the re 
verse of what it would be under a healthy condition of 
business. Instead of so much currency being used to 
float speculation as can be spared from legitimate busi¬ 
ness, only so much currency will he apt to go into legiti¬ 
mate business as can be spared from floating specula¬ 
tive enterprises. The greater the inflation, therefore, 
the more speculation will control the currency, and the 
less a proportion will be left for legitimate business. 
Far from giving greater facilities to the transactions of 
legitimate business, increased inflation will only tend to 
increase the want far in excess of the supply. Infla¬ 
tion will increase the want, for it will run up the pre¬ 
mium on gold, and have the effect of raising general 
prices, rendering thereby a greater volume of currency 
necessary to effect the same exchanges. Inflation will 
not in proportion increase the supply, for it will drive 
a larger proportion of the currency into the channels of 
speculation, and divert it from the channels of legiti¬ 
mate business. One hundred millions will not help 
you, and if you put out £wo hundred millions.it will 
help you still less, for the appetite will not be satisfied; 
it will only be stimulated by the supply. 

Now issue more currency, and it will go just as little 
where you want it to go as it does now. You can issue 
it; but, mark my words, you cannot force it into the 
channels of legitimate business, and you cannot force it 
out of the channels of speculation. The currency you 
issue will fall under the control of exactly the same 
class of men who control it now, only in a larger and 
more oppressive form. It will only be a more power¬ 


ful weapon in the hands of the speculator to cripple 
legitimate business and to oppress the people the more 
there is of it. It always has been so, and it always 
will be so ; and the sooner the American people make 
up their minds to this fact and honestly act upon it the 
better it will be for their virtue as well as for their 
prosperity. 

Now, sir, sincerely and profoundly do I sympathize 
with the people of the Senator from North Carolina, 
as I do with the people of all the States who are suffer¬ 
ing ; and I should be most happy to aid them in their 
distress. But, I repeat, I am profoundly convinced 
that inflation will not only not help them, but aggra¬ 
vate the evils of which they are complaining. I would 
not consent to give them poison, even if they would ask 
me for it. 

VI. Capital, Not Currency Needed. 

Senators from the South say their people need more 
currency. No, sir; there is another thing they need. 
There is another and far greater difficulty. They 
need more capital; and they indulge in a most fatal 
delusion if they think that the trick of watering their 
currency can supply them with that capital. There 
are some most obvious causes at the bottom of their 
difficulties. The people of the South have gone through 
a wasteful war, which has consumed and destroyed a 
very large portion of their wealth, and thus their capi¬ 
tal has dwindled away. The waste has been increased 
in some of the Southern States since the war by very 
bad government: and finally our tariff and the influen¬ 
ces of an irredeemable currency have produced upon 
them the same depressing effect produced by the same 
influences everywhere upon the agricultural interest. 
Thus the people of the South have to make up for a 
very large deficit, and that deficit cannot be covered by 
paper promises to pay. If they want to regain their 
former wealth they must adopt the same methods by 
which wealth is created elsewhere; they must produce 
more, much more than they spend, and they must care¬ 
fully husband and gradually accumulate their surplus 
earnings. They seem to have made themselves believe 
that an inflation of the currency will aid them in getting 
upon their feet again and accelerate their recuperation. 
But inflation will still more depress the agricultural in¬ 
terest, which is the principal source of prosperity in the 
South as well as the West. 

Another scheme by which more currency is to be in¬ 
troduced into the West and South, and a larger amount 
of circulating medium is to be made available for legit¬ 
imate business, is the establishment of a greater num¬ 
ber of national banks of issue. The complaint is that 
the Eastern States have an undue amount of national- 
bank circulation, and therefore enjoy in a measure a 
monopoly. I admit this to be true. I will not discuss 
here the system of banking in all its aspects, but I will 
inquire how far the establishment of more national 
banks of issue in the West and South will remedy the 
real evil complained of—which evil consists in a lack of 
loanable capital there. If the remedy proposed is to 
serve any good purpose at all, then the establishment 
of new national banks of issue must increase the avail¬ 
able amount of loanable money. If it does not do that, 
it renders scarcely a service worth mentioning. Now, 
will it do that ? The Senator from Indiana, who is 
always ready with his answers, says yes; that it will 
increase the amount of loanable money by the amount 
of bank-currency put out; for he argues, the currency 
issued will be given out in loans and. discounts which 
every thirty, sixty, or ninety days Will return to the 
banks. The currency will, therefore, stay where it is 
issued, and not flow East. Is this sound? I assert 
that it is fallacious in the highest degree. The Senator 
simply forgets to tell us how those new banks are to get 
their issues. 

VII. Export and Import Prices Gambling 
Risks. 

A considerable portion of some of the most impor¬ 
tant products of agriculture is exported, and the home 
price of the whole crop of those specific articles is regu¬ 
lated by the foreign market. That is a universally 
known and recognized fact. The prices ruling in the 
foreign markets are, first, depressed by the tree compe¬ 
tition of the whole world ; and, secondly, a specie stand¬ 
ard prevailing there, they are not driven up by the in¬ 
flation that has enhanced the prices of all other articles 
in this country. The farmer or the planter has therefore 
to sell these staple crops at the low prices regulated by 
the foreign market, while for all the necessaries he has 
to buy he pays the prices grown up to an exorbitant 
hight, far beyond the premium on gold by our home 
inflation. The Senator from Massachusetts on my left, 
[Mr. Boutwell] said that the influence of a depreciat¬ 
ed currency does not raise general prices more than 
the amount of gold premium if the depreciation of the 
currency remains steady at the same point. But the 
difficulty is that the depreciation of the currency does 
not remain steady at the same point. Our experience 
shows us that the premium on gold in this country has 
not remained at the same point for a single week, scarce¬ 
ly for a single day. 

The Senator from Illinois [Mr. Logan] said that he 
thought the same law was governing the price of an 
imported article that was governing the price of an ex¬ 


ported article in the case of a depreciated and fluctuat¬ 
ing currency. Now, sir, I am going to show that the 
same law does not govern these two things. Let us see 
how it works. The importer or the wholesale mer¬ 
chant in New York, when putting up his goods for sale, 
will first add to the gold price the premium on gold. 
That is universally conceded. But he knows that the 
premium on gold or the discount on the currency fluctu¬ 
ates, and that if it be inflated it will certainly depreci¬ 
ate. If he sells on credit, however short that credit, 
may be, he runs this risk : that the sum he receives in 
paper money for his goods will not represent the same 
gold value which the same sum represented at the time 
w’hen the sale was made; and here an important ele¬ 
ment comes into the calculation of prices, which has 
been left out by all the Senators wh», taking the oppo¬ 
site view, have digcussed this subject. It is the element 
of risk. The importer, or the manufacturer, or the 
wholesale dealer, must protect himself against the con¬ 
tingency of fluctuation; and thus he puts upon the 
price of his goods a certain percentage to cover that 
contingency. In other words, he makes his customers 
pay for the gambling risk which he himself has to run. 
The jobber who buys from the importer or the manu¬ 
facturer has to put his gambling risk upon the price 
again, for he runs the same chance. The western or 
southern wholesale dealer who buys from the jobber 
has to do the same thing once more, for he again runs 
the same chance. Then the western or southern re¬ 
tailer into whose hands the goods finally pass, has to 
do the same thing again, if he sells on credit, for he 
again runs the same chance. Thus two, three or four 
gambling risks are put upon the price of an article be¬ 
fore the commodity, as it issues from the hands of the 
original seller, passes into the hands of the consumer, 
and thus the rise in the price of commodities goes far 
beyond the premium on gold, especially when the fluc¬ 
tuations of the currency, as inflation will always make 
them, are tending in the way of depreciation. 

Now go to New York and every candid merchant will 
tell you the same story. I know of merchants in New 
York who actually changed the prices of their com¬ 
modities during violent fluctuations of the currency 
six times in one week; and one told me himself that he 
had done so several times in one day, always lowering 
or raising the gambling risk he had put upon the price 
of his commodities as circumstances changed. And 
experience teaches us that merchants are apt to be 
very quick in putting up prices and very slow in put¬ 
ting them down. 

VIII. Inflation a Curse to Farmers. 

Hence it is clear that while the farmer or planter gets 
for his product only the gold price, with the gold pre¬ 
mium added at the place of sale, he must pay for all he 
has to buy the gold price, with the premium added, 
and an additional amount covering the gambling risks 
of three or four dealers through whose hands the pur¬ 
chased articles pass before they reach him, and that 
additional amount covering the gambling risk will 
naturally grow very much higher when the currency is 
inflated and in process of depreciation. The conclusion 
is inevitable that in this point of view, the correctness 
of which cannot be questioned, an irredeemable fluctu¬ 
ating currency cannot be anything else but a curse to 
the agricultural interest, a curse the more oppressive 
as inflation goes on; and the more inflation there is the 
more the farmer will lose in buying in proportion to the 
prices at which he has to sell. 

No; if the farmer or planter wants to prosper he will, 
above all things, use every effort within his power to 
rid fhe country of a system of currency which obliges 
him to sell at low and to buy at high prices. He may 
for a moment think that inflation will aid him in pay¬ 
ing off his debts, if he has any ; but upon considera¬ 
tion he will discover that debts are paid out of surplus 
earnings, and that his earnings will be depressed when 
the price of what he buys is high in proportion to the 
price of what he sells; that his surplus earnings will 
grow larger as soon as the price of what he sells is put 
upon an equal footing with the pricejff what he buys. 
He will discover that the trick of depreciating the 
legal tender by inflation, in order to pay what he owes 
in a currency less valuable, will not redound to his ad¬ 
vantage in the end, and that in this, as in all other 
things, honesty is, after all, the best policy. He will 
discover that an honest currency, which permits him 
to buy and sell on the same basis of value, is for him 
the safest basis of prosperity, and I trust the time is 
not far distant when the farmers, whatever artifices of 
demagogism may be used at present upon them, will, 
as one man, stand up honestly and intelligently for the 
earliest possible return to specie payment. 

[concluded next week.] 


The Financial Record is published by the Finance De¬ 
partment of the American Social Science Association, at 
their offices in New York and Boston. All communications 
respecting it may be addressed to the Secretary of the Asso¬ 
ciation, F. B. Sanborn, No. 5 Pemberton Square, (Room 21„ 
Boston; and all exchange papers, public documents, etc., mav 
be forwarded to the same address. 











FINANCIAL RECORD. 

»"WE NEED ONE THING BESIDES MORE MONEY, AND THAT IS BETTER MONEY ."—Senior Zach. Chandler. 


VOL. I. 


THURSDAY, MARCH 26, 1874. NO. 8. 


The Financial Record will be published weekly three 
mouths, and may be continued beyond that period It will 
be, as its name indicates, a record of facts and opinions on 
the questions of National Finance which are now so impor¬ 
tant to the American people; and all persons, editors or others, 
to whom it is 3ent. are invited to use it freely, and to copy from 
it without hesitation if they see fit. It will be sent free of 
postage, to all persons who will remit 50 cents to the publishers 
at No. 5 Pemberton Square, Boston. All editors who may re¬ 
ceive it are invited to send their papers in exchange. 


The Spirit of Congress, 

The Dutch have taken Holland ! The inflationists 
carried the House on Monday, and passed the long- 
pending bill legalizing the issue of greenbacks up to 
$400,000,000. Two amendments, limiting the issue to 
$366,000,000, and $382,000,000, respectively, were de¬ 
feated by 70 to 171; and 74 to 172; and the biU passed, 
168 to 77. These votes do not change the aspect of 
affairs, for the inflation cause is neither strengthened 
nor weakened in the Senate, upon which the friends of 
honest money long ago placed their chief hopes. This 
action of the House was taken without a moment’s 
serious debate, the rules being suspended and the pre¬ 
vious question called, although this bill was the most 
important measure the present Congress has had to 
consider. 

On Monday, in the Senate, Mr. Sherman reported from 
the Finance Committee a new bill, intended as a com¬ 
promise. Though the Committee unanimously agreed 
to the report, it is believed that only Senators Sherman, 
Scott and Morrill (Vt.) will support it; Messrs. Ferry 
(Mich.) and Wright opposing the biU because it does 
not inflate the currency enough, and Messrs. Fenton 
and Bayard because it authorizes inflation. The pro¬ 
visions of the bill are, (1) the maximum issue of legal 
tenders is to be $332,000,000, until it is reduced; (2) 
after January 1, 1876, greenbacks shall be redeemable 
in gold, in sums of even thousands of dollars, or the 
Treasury may instead redeem them in five percent ten 
year bonds; the greenbacks so redeemed to be used in 
bujmg other bonds or in meeting current expenses ;(3) 
no national banks may be organized in States and Ter¬ 
ritories having a smaller proportion of bank circulation 
than New York, until such State has reached the pro¬ 
portion of New York, and the law of 1870 authorizing 
a withdrawal of currency from certain States is repeal¬ 
ed ; (4) there is to be a withdrawal of greenbacks along 
with the issue of national bank notes, to the amount of 
seventy per cent of such issue, until the whole volume 
of legal tenders is reduced to $300,000,000; (6) national 
banks must keep one-fourth of the coin interest on 
bonds, and only one-fourth of their reserve with redeem¬ 
ing agents; and no interest is to be paid or received on 
balances kept with other banks ; (6) no increase of the 
national debt is authorized. 

Mr. Morton made a long speech Monday. He want¬ 
ed no further issue of currency beyond the $400,000,- 
000, and what would come from free banking. He 
said that specie payments cannot be resumed until we 
have $400,000,000 of gold in the country. Mr. Schurz, 
having forced Mr. Morton to say that he believed the 
issue of the "reserve” lawful, quoted from Mr. Morton 
in 1868 an opinion that the issue was not lawful. To 
this Mr. Morton retorted that Mr. Schurz sometimes 
changed his own opinions. The debate then digressed 
into a consideration of the power of the Secretary to 
issue the "reserve.” Mr. Bayard characterized the 
action of the Secretary as a flagrant violation of law. 
Mr. Conkling referred to the deb.ate in 1868, when the 
Senate then refused to prohibit the issue; arguing that 
therefore the Secretary had a right to construe his pow¬ 
er in a liberal way. Mr. Sherman confessed his regret 
that the re issue of cancelled greenbacks had not been 
forbidden in 1868,—(it may be said that it was owing 
to Mr. Sherman’s opposition, based upon the idea that 
a re-issue was unlawful, that the amendment was then 
rejected,) and declared that if there had then been any 
fear that the Secretary would assume the power, the 


amendment would have been carried almost without 
disgent. 

On Tuesday the biU reported by Mr. Sherman was 
taken up. Mr. Sherman repeated his warnings against 
postponing action, looking towards specie payments; 
and in conclusion denied that the currency question 
was a sectional or party issue. It involved the faith 
and honor of the whole country. Mr. Thurman spoke 
for the first time, and pronounced against the pending 
bill and against inflation. He was particularly severe 
upon the free banking proposition. Both Mr. Thurman 
and Mr. Bout well appear to be equally opposed to either 
inflation or contraction; but while Mr. Boutwell would 
place the $44,000,000 "reserve” at the disposal of the 
Secretary, Mr. Thurman would not. 

On Wednesday amendments were offered to the 
Sherman bill,—one by Mr. Schurz to limit the maxi¬ 
mum tc $356,000,000, the other by Mr. Wright to fix it 
at $400,000,000. Mr. Bayard convicted Mr. Ferry of 
inconsistency by showing that in 1865 he voted, as a 
member of the House, in favor of contraction. Mr. 
Scott began a speech, in which he said that there are 
three questions to be decided: When is the pledge of 
1869 to be redeemed? What kind of currency is to be 
furnished ? and, What quantity ? So long as either of 
these questions is unsettled, business will be unsettled. 
On Thursday,(to-day) the Senate adopted Mr. Wright’s 
amendment, 31 to 26, having first voted down Mr. 
Sohurz’s, 40 to 18. This vote places the Senate on the 
same ground with the House, in favor of inflation; but 
this action may be reconsidered or modified, as the de¬ 
bate goes on. This country is evidently against infla¬ 
tion, as Gen. Grant is. 


The President against Inflation. 

General Grant declared to an applauding country, in 
his first inaugural address, in the year 1869, that "the 
return to a specie basis must be provided for as soon 
as it can be accomplished without material detriment 
to the debtor class or to the country at large.” The 
very first act which was presented for his approval after 
he became President was entitled " An act to strength¬ 
en the public credit,” and pledged the Government 
anew to an early resumption of specie payment. Now 
it is gratifying to learn, as we do on the best authority, 
that Gen. Grant, who is “a very obstinate man,” firmly 
adheres to his previous convictions, and says that any 
legislation, tending directly to permanent inflation, 
must run the gauntlet of his veto. He favors free bank¬ 
ing but insists that any increase of our paper money 
should be accompanied by provisions for the early re 
demption of the greenbacks in coin. Upon this point, 
he refei s to the pledged faith of the Government to pre¬ 
serve and strengthen the public credit, and to redeem 
its non-interest bearing obligations at the earliest prac¬ 
ticable day, and says that such a purpose having had his 
official approval and the support of his personal con¬ 
victions, he cannot now disregard it, nor permit it to be 
disregarded in legislation. To all which, the country 
will say Amen) 

Charles Sumuer’s Speech, 

In the financial speech which Senator Sumner had 
long been meditating and preparing, and which would 
have been delivered about this time if he had lived, it 
was his intention, we learn, to give a history of paper 
money in this country and Europe, and to trace its 
effects upon prices, wages, and domestic and foreign 
commerce. Some of its points were these : First, that 
an insuperable barrier to any future issue of paper 
money by the government should be set up. Second, 
that aU our greenbacks should be withdrawn by con¬ 
verting them either into compound-interest notes, or 
into 5 per cent bonds. Third, that the $26,000,000 of 
iUegaUy issued greenbacks should be called in and de¬ 
stroyed immediately, and that either bonds or com¬ 


pound notes should be employed for this purpose. Mr. 
Sumner’s literary executors can render the public a ser¬ 
vice by submitting his papers on finance and currency 
to Mr. Schurz, or some other competent person, to be 
prepared for the press. Those who know how thorough¬ 
ly and conscientiously Mr. Sumner always investigated 
his subject, will not doubt that portions of his speech 
on the currency, such as can be published, are extremely 
valuable, and would exert no little influence for good if 
given to the world at once. 


The Workingmen and the Currency. 

Commenting upon Senator Schurz’s speech and Sen¬ 
ator Logan’s reply, the Cincinnati Commercial says: 

It was Schurz who spoke for the workshops and the 
farms, where the instability of the currency inflicts 
losses incessantly, while Logan’s cry for more money 
is in behalf of the money-changers and note-shavers. 
Wall street speculates and grows riotous on irredeem¬ 
able and fluctuating currency, at the expense of the 
farms and workshops and all honest and productive 
toilers. 

That this last statement is true can be shown by Sena¬ 
tor Morton himself, who a few years ago, during the 
lifetime of Senator Fessenden of Maine, spoke as fol¬ 
lows in the Senate : 

I had hoped that the Senate had got past the time 
when it was necessary to argue the evils of the infla¬ 
tion of the currency—the general increase of specula¬ 
tion; the general diminution of productive industry 
and the resort to speculation instead. Does not every 
man know that the result of an inflation of the curren¬ 
cy is to increase the price of everything that is bought 
and sold, first beginning with the price of personal 
property, then touching real estate, and then, perhaps, 
coming to labor 7 

Me. Fessenden. —It begins with labor. 

Me. Moeton. —The Senator says it begins with labor. 
I submit that it is the experience of the world that the 
price of labor is the last thing that is inflated. 

Me. Fessenden. —The Senator does not understand 
me. I mean to say that labor is the first thing to suf¬ 
fer from inflation. 

Mr. Moeton. — With that understanding I agree. It is 
the first thing to suffer from inflation, and the last thing to 
be improved by it. Sir, as soon as inflation takes place 
speculation begins ; and what is the effect of it ? Every¬ 
thing acquires two prices, the real price and the specu¬ 
lative price. 

Men can put property into warehouses and hold it 
for a rise of prices, and thus, as we saw during the 
war and during the great inflation, the price of goods 
goes up 50, 150, 200 and 300 per cent., because of this 
speculative price brought about by the great abund¬ 
ance of money. 

But how is it with labor? You cannot put labor 
into a warehouse and hold it for future demand or 
speculation. The demand for labor is immediate, as 
labor is needed; and therefore, when inflation takes 
place, labor is the last thing to be inflated and the first 
thing to feel the evils of it. 


Per Capita Thunder and Lightning. 

An Englishman riding on the box with the stage 
driver in Vermont, one summer day, got caught in a 
thundershower. “Don’t you have very heavy thun¬ 
der here for a new country ?” asked John Bull. "Yes," 
replied Brother Jonathan, as he whipped up his horses, 
"We du have pooty severe thunder an lightnin’ in 
V’mont, considerin the number of people to the 
square mile.” It is about as reasonable to talk of per 
capita thunder and lightning as of a per capita currency. 
Besides this, the argument of those who contend that 
the amount of money needed in a community can be 
ascertained by counting the people, proves too much. 
The last monthly report from the Bureau of Statistics 
estimates the coin and note circulation of Great Britain 
at $686,421,640 in United States gold, and that of 
France at $1,209,545,441. The population of Great 
Britain, by the last census was 31,817,108; that of 
France was 36,102,821. The per capita circulation of 
Great Britain was therefore $21.67; that of France 
$33.50. Now it follows that if commercial prosperity 
is proportioned to the amount of money per capita, 































18 


THE FINANCIAL RECORD. 


France ought to be vastly more prosperous than Great 
Britain. It is notorious that she is not now, ^nl has 
seldom been so prosperous as England. It is also no¬ 
torious that although France has the greater volume 
of currency, England is much richer ; buys more, sells 
more, and invests tenfold more abroad. There are in 
Great Britain more than twice as many miles of rail¬ 
road, and two and a half times as many miles of tele¬ 
graph line in proportion to territory as in France, and 
Great Britain owns eight times as much shipping as 
France. And, finally, Great Britain, with her smaller 
volume of currency, and owning less gold and silver 
than France, controls the bullion market of the world. 

Again, the statistics ofthese two countries show that 
excessive current issues alone do not cause alow rate 
of interest. The rate of discount at the bank of France 
is uow lour and a half per cent, the lowest point it has 
reached since the middle of 1870. At the same time 
in London it is three and a half per cent. The rate 
in France was lower than now four years ago, when 
the note circulation was smaller by $260,000,000 than 
it is to day. It is now lower in Great Britain although 
France has twice the volume of paper money. Uf 
course the true cause of low interest is abundant capi¬ 
tal, not money; an excess of net profits over and above 
the amount expended by the whole people for articles 
of consumption. But we do not enlarge upon this, our 
present object being only to show how little there is 
in the per capita theory. 


A Protest from Michigan. 

Mister Editor. —Our Senator Chandler is right; 
we want not only more money but bitter money; and 
above all things we need to stop lying. You Eastern 
gentlemen don’t like to use plain language. You call a 
spade an agricultural implement. But after all it’s on¬ 
ly a spade. Now, look here: I have got lying before 
me— lyin') in a double sense, what is called a greenback. 
It is a ragged and greasy shinplaster, dated, as near as 
I can find out, 1869; and on its face it says : “The Uni¬ 
ted States will pay to bearer Tvo Dollars.” If I were 
to go to Washington and demand the fulfilment of this 
promise, even Secretary Richardson would turn up his 
nose at me. The United States in fact promises me, 
but it don’t keep its promises ; of what u>e is a promise 
if it is not kept! It my neighbor promises me a bar¬ 
rel of cider, and don’t give it to me—it he promised it 
out of good nature, and don't give it I call him a shabby 
fellow. But if he promised it in return for a service I 
lendered him, and refuses to give it, he is not merely a 
shabby fellow, he is a cheat ; and I'd take the law of 
him, or punch his head if I was big enough. 

If in court he should acknowledge the service, and 
the engagement, but plead that he did not promise 
for any particular time, he would be a barefaced swindler, 
and his act would be a fraud.. If further he should claim 
that he would do tiiis because he was rich and pow¬ 
erful, and I too poor to follow him through the courts, 
he would be a scoundrel. If he denied his promise 
he would be a liar. If he tried to give value to his 
repudiated agreement by warning other people against 
imitating or counterfeiting it, he would be an impudent 
rascal. If he persuaded the courts to force me and oth 
er poor people to accept such promises to pay as valu¬ 
able, he would be a tyrant and monopolist. 

But if you examine a greenback, you will plainly see 
that its face convicts the United States of every one of 
the crimes I have named, a greenback is a lie and 
a fraud ; and the government which in the year 1874, 
nine years after the war closed, puts it out, and forces 
me to take it under the ridiculous pretence, that it is 
money, unites lying to fraud and impudence to lying. That 
is the plain truth. 

Don’t imagine I’m a copperhead. Everything is fair 
in war; and in the war for the Union, when our dearest 
and best died in the field, the government was right not 
to hesitate at any thing. If it had made pewter buttons 
a legal tender, I should have said, amen! But it’s 
now nearly nine years since the last rebel laid down his 
musket. If we lied during the war, for heaven’s sake, need 
we go on Iging forever ? 

We, out here, like the national bank notes; because 
they pass current all over the Union. We farmers need 
not stand a shave, when w r e want a bill to send East 
for a magazine, newspaper or book, or for a new dress. 
We got tired of state shinplasters; and I. for one, don’t 
ever want to see any more wild cat and red-dog. Also, 
we want more money ; every body does. But we want 
MONEY—NOT ONE RAG REDEEMABLE IN ANOTHER. 

That’s a double fraud. 

If the national banks were obliged to redeem their 
notes in money and not in other rags; in coin, and not 
in lying promises of the United States, they would 
make tiie best currency we, out here, can imagine. 
But the national banks will never do this while the gov¬ 


ernment allows them to force upon me its own fraudu¬ 
lent and swindling promises instead of real money. If 
you will make the national banks redeem their notes in 
coin, and hang the banker who fails to do so to his own 
door posts, can we have any thing better ! And so 
long as they do redeem their bills in coin, can it matter 
how many of them there are! I, for my part, don’t 
care if they set up a bank at every railroad depot; so 
long as I can get coin for their bills when I want it. 
And I don’t see how Congress, or the Secretary of the 
Treasury, or both together, can tell how much money 
the country needs. They don’t know enough to de¬ 
termine this fact, and its none of their business anyhow. 
What they are to look out for is to make such laws as 
will force every banker to redeem his notes in coin. 
If they do that the currency will regulate itself, and 
the idiotic debates in Congress, about more or less 
money, will die out. Yours, 

A Michigander. 

March 20, 1874. 


Tlie New York Meeting. 

An important meeting in favor of National Honesty 
was held in New York, Tuesday evening, March 24; 
it was exceedingly large and represented the best class 
of business men in that great city. Mr. William Cul¬ 
len Bryant presided. In his speech he recalled the 
fact that the legal tender issue was excused only as a 
war measure; and pointed out that those who, like him¬ 
self, had opposed it from the start, now saw all their 
predictions verified. It, said he, further inflation is 
sanctioned, it will lead to another collapse of credit, 
another era of commercial ruin and utter stagnation ot 
trade. “If this be not so the annals of the world are 
a fable and experience is a cheat.” Mr. Elliot C. Cow- 
din reviewed the successive processes by which irre¬ 
deemable paper money brings ruin to a country. The 
issue of money is a function of banking and not a le¬ 
gitimate function of government. The legal tenders 
were due ten years ago, and every day’s delay is a con¬ 
tinued repudiation. Mr. A. A. Low called attention to 
the marked change from the wise and prudent states¬ 
manship of the war time. Then the first issue of legal 
tenders was carried by a bare majority. The Secreta¬ 
ry of the Treasury favored the measure with great re¬ 
luctance. The Attorney General only gave his unofficial 
sanction. Mr. Sumner called it “the medicine of the 
Constitution” and lo ! it has become the daily bread of 
the people. 

Mr. Edward Atkinson made a plea for general reform, 
but especially in the currency. He ascribed the pres¬ 
ent financial madness not so much to dishonesty as to 
ignorance. The secret of the whole matter was that 
the nation should keep its promise, as it has the abili¬ 
ty, and be true to the living and the dead. He thought 
the vote of the House on Monday would make us the 
laughing stock of the world. Speeches were also made 
by Messrs S. B. Chittenden, George Opdyke and Wil¬ 
liam Wood. The resolutions recite the evils of inflation 
and oppose it in every form. Letters were read from 
Charles Francis Adams and others, portions of which 
we may hereafter print. 


Spirit of tlie Press. 

[From the Chicago Journal ] 

Too much stress could not be laid upon the import¬ 
ance of restricting the issue of currency. It is so easy 
to grind oat paper money that whenever a country is 
on a paper basis there will always be a strong pressure 
for expansion. Mr. David A. Wells, in an article con¬ 
tributed to the April Atlantic shows conclusively that 
the great peril ot paper money lies in the direction ot 
expansion. The benefit of coin is that the supply is 
necessarily small, and indefinite expansion is impossible. 
How can Congress put an insuperable obstacle in the 
way of inflation ! It is impossible, so long as we have 
a greenback currency. 

Give us good money, worth dollar for dollar, so that 
importer, exporter, merchant, meohauic and farmer 
shall all use the same kind of money, and stand upon 
an equality in respect to its value. This means a res¬ 
toration of specie payments; it means contraction of 
the present volume of the currency. But there is no 
other way, if you propose to buy and sell in the mar 
kets of the world. It means to keep at home for five 
or six years the $60 000,000 value of gold annually 
produced by our mines, and to require our banks and 
our treasury to put it in coin iuio their vaults. It 
means a gradual withdrawal of the currency, month 
by month, until we can get the volume of our notes 
within a controllable bulk. This, I know, is unpala¬ 
table doctrine for many, but it is what you would do in 
your private business. What would you say of the 
man who, having ten notes to pay should propose to 
put out ten more to make things “elastic ?” The great 
volume of currency we have had made money no 
easier or cheaper than it was when we had half the 
quantity to the head. It is got hold of by the specu¬ 
lating class and u«ed simply to do further mischief.— 
IF. C. Flagg, Carlinsville Speech. 


CARL SCHURZ. 


His Second Great Speech on the Currency. 

SPOKEN IN THE U. S. SENATE FEB. 24, 1874. 

[Abridged from the official Report.] 

[We print this week the conclusion of our abridg¬ 
ment of Senator Sehurz’s speech, and we also issue^fhe 
whole abridgment in an extra, which may be obtained 
by those who wish to distribute it, at 25 cents per doz¬ 
en copies, and $2 per hundred. We enclose this extra 
to some of our subscribers for distribution,^.nd hope 
they will lend or give away these copies freely.] 

IX. National Bank Circulation. 

Let us look at the provisions of the national banking 
act. It provides that in order to establish a national 
bank United States bonds must be deposited in the 
Treasur 3 r of the United States, and that 90 per cent, of 
the nominal amount of those bonds may be issued by 
the national bank as currency. Now in the first place, 
those who want to establish a national bank will have 
to deposit the bonds. It is a notorious fact that in the 
West the amount of United States bonds held is rather 
small, and in the Soutli still smaller and the bonds which 
are there are mostly held as fixed investments. The 
persons who want to establish national banks must 
therefore buy their bonds. They must buy them 
where bonds are sold, that is in the Eastern markets; 
and they must buy their bonds with money. Where do 
they get that money! They take that money out of 
their home circulation, and the money so taken outot 
their home circulation they carry to New York. 

Now see how this operates. For a $1000 bond they 
have to buy they pay, as 5 pur cent, bonds now stand, 
about $1120 in currency. That sum of $1120 is with¬ 
drawn from their home circulation and is added to that 
of New York. Then they take the $1000 bond so pur¬ 
chased to Washington, and for that $1000 bond they 
get $900 in bank currency, and the $900 they carry 
iiome. Then they lock up 15 or 25 per cent, on the 
$900, as the reserve prescribed by law, in their bank 
vaults, as they may be country or city banks. For the 
$1120 carried to New York the country bank then 
puts out $865 and the city bank $675 to accommodate 
tbeir customers with loans and discounts. These loans 
and discounts may indeed come back to the bank 
every thirty or sixty or ninety days. But does not 
the Senator from Indiana see, is there anybody so blind 
as not to see, that a much greater amount bad gone 
East before the western or southern bank could make 
any loans and discounts to its customers with its 
national bank circulation! Is it not as clear as sun¬ 
light that for every $865 issued by a country bank, 
or every $675 issued by -a city bank, $1120 has gone 
to New York before! Is it not clear that the amount 
of loanable money, instead ot being increased, has been 
diminished 30 or 40 per cent, by the operation! It 
is true that by the establishment ot national banks 
here and there some greater banking facilities may 
he offered They take deposits, and they- make dis¬ 
counts; but the value of all the facilities thus of¬ 
fered will not make up for the diminution which the 
home circulation, the amount of loanable money has 
actually suffered in that locality by the process. Where, 
then, is the increased accommodation of the business 
public! Nowhere; but the result is just the reverse. 

But the Senator from Indiana tells us that many ap¬ 
plications are made for permission to establish national 
banks in the West and South. That is probably true. 
Why are they made! The persons making them know 
well what they are doing. The bankers themselves 
may do a profitable business, drawing interest on their 
bonds and on the circulation at the same time. But 
the difficulty is that their profits are their own and do 
not benefit the business community ; for the amount of 
loanable money which is to accommodate business men 
and help along enterprise is not only not increased but 
is seriously curtailed by the operation, and tlie result is 
not tnat the West or the South gets more, but that the 
East gets more and the West and South less available 
funds after it than they had before. 1 have made these 
remarks in order to explode that, most extraordinary 
notion of the Senator from Indiana, that if we only 
permit the establishment of more national banks in the 
West, and South, more currency will go and stay there, 
because the loans and discounts of the banks will return 
every thirty, sixty, or ninety days ; and to dispel that 
general and almost incomprehensible delusion, that by 
the establishment of such banks, under such laws as 
we have, the amount of loanable capital in the West or 
South will be increased and not diminished. What¬ 
ever results free banking under the national bank act 
may have, it will certainly not produce those effects 
which the advocates of free banking in the Senate pre¬ 
tend to be working for. 

• X. Free Banking. 

Suppose now that the enactment of such a free-bank¬ 
ing law results in a large increase of national bank cir¬ 
culation, what will be the effect! The Senator from 
Indiana says it will only make things lovely, and not 



















THE FINANCIAL EECOBD. 


19 


disturb values at all. Let us see. What are the 
causes which produce the disturbance of values 
through an irredeemable currency ? There are two. 
First, lack of popular confidence in the issuer of that 
currency ; and, secondly, the relation the quantity of 
the currency bears to the actual requirements of the 
business of the country. The first of these causes, the 
lack of confidence in the issuer, operated during the 
war, while the stability of our Government was still in 
question, and lienee the fact that the fluctuations of the 
currency went far beyond the fluctuations that would 
have been caused by the relation of the quantity of the 
currency to the actual requirements of the business of 
the country. That cause, lack of confidence in the is¬ 
suer, has not operated since the Government showed 
that it could maintain itself, and also demonstrated its 
ability to work in the direction of a redemption of its 
liabilities. But, sir—and I wish the Senate to mark 
this—that cause will commence to operate again as 
soon as the quantity of the currency has increased to 
such an extent as to render the ability or willingness of 
the Government, or of the banks, ultimately to redeem 
their promises, in public opinion doubtful. The second 
cause, that is to say, the relation the quantity of cur¬ 
rency bears to the actual requirements of the business 
of the country, will operate as soon as the quantity of 
currency in circulation is in excess, of the actual re¬ 
quirements of business, and that effect will grow more 
extensive as the volume of currency is increased. And 
here, it seems to me, it matters very little whether the 
inflation of the currency be that of the legal-tender 
notes or the national-bank notes, only with this differ¬ 
ence, that, as I admit, an inflation of the national bank 
notes will be 25 and 15 per cent, respectively, less 
effective, owing to the amount of greenbacks to be 
locked up as bank reserves; but either kind of infla¬ 
tion, in my opinion, will run up the general prices of 
commodities, of gold among others; will stimulate 
speculation, and speculations will have the same eflect 
that it had before. It will draw the currency away 
from the channels of legitimate business and concen¬ 
trate it at the great centers under its own control, thus 
preparing the way tor new collapses and disastrous 
crises. These breakdowns will be the more disastrous 
the greater the inflation of the currency has been. 

Now, sir, L do not wish to be understood as being 
absolutely opposed to free banking under any circum¬ 
stances. I should be inclined to vote for it if it be 
coupled with an effectual system of redemption. Of 
course redemption in specie would be the most satis¬ 
factory to me. At present redemption means practi¬ 
cally nothing. It accomplishes only the locking up of a 
certain percentage of the greenbacks for a purpose 
which is only apparent, and which might practically 
be accomplished by locking up the same amount of 
bank notes. Redeeinability, as it now is, might become 
of importance only in the extreme case of violent and 
extensive fluctuations in the market value of our 
bonds, such as might be caused by the very improbable 
contingency of a foreign war and the consequent in¬ 
crease of our national debt. But now, in the ordinary 
run of business, redemption under our present law has 
no restraining influence upon the workings of our cur¬ 
rency, except locking up a certain amount of green 
backs. A restraining influence, however, might be im¬ 
parted to it even while we are under suspension of 
specie payments, by establishing between the Govern¬ 
ment legal-tender and the national bank note the same 
relation which in suspension times existed in England 
between the Bank of England note and the country 
bank-note there; that is to say, if we give the Govern¬ 
ment legal-tender note a sphere of action superior to 
that of the national-bank note. In that way I think 
tree banking might be kept from running into inflation, 
and I should be inclined to vote for it. But without 
such a provision free banking, in my opinion, will re 
suit in inflation ; and I have shown that an inflation of 
virtually irredeemable national-bank currency will, first, 
not remedy the evils which are complained of in the 
West and South, but rather aggravate tlfem ; will not 
give them a larger amount of loanable money, but 
seriously reduce that amount; will not destroy what 
has been called the banking monopoly of New Eng¬ 
land and New York, but rather confirm and strengthen 
that monopoly; and, secondly, if a free banking act 
such as is proposed, without an effectual system of re- 
demjftion, leads to the establishment of many new 
banks of issue as desired, it will have its effect of inflat¬ 
ing the currency just at the centers of speculation ; all 
the evils of inflation will inevitably follow; that is to 
say, violent fluctuations of values, over-speculation, 
and gambling on a larger scale then ever, until a new 
crash comes, which new crash will be the more disas¬ 
trous the greater the inflation has been. 

XI. Inflation Raises the Rate of Interest. 

I said in my first speech on this subject that the in¬ 
flation of an irredeemable currency will not reduce but 
will raise the current rates of interest; and that pro¬ 
position has been questioned. The Senator from Illinois 
[Mr. Logan] went into a disquisition on the laws of 
demand and supply, and the Senator from Indiana [ Mr. 
Morton] disposed of the subject by the somewhat joc¬ 
ular remark that if more money were put into the 


market it would become cheap, just as if more horses 
and hogs were put into the market horses and hogs 
would become cheap. I suggest to the Senator from 
Indiana that the horse and hog argument is'not quite 
sufficient in this case. He has only shown in this in¬ 
stance. as in many others, that he does not appreciate 
the difference between capital and currency, especially 
between capital and an irredeemable paper currency. 
I shall try to make myselt clear. 

Why will the inflation of an irredeemable paper cur¬ 
rency not lower but raise the rates of interest? In the 
first place, in depreciating the currency, it will make 
a larger amount of currency necessary to perform the 
same transactions in business, and the aggregate 
amount of interest which you would have to pay for 
the sum you want for the same transactions would 
necessarily be larger. That, I think, is obvious. In 
the second place, when the currency is inflated it incites 
speculation and gambling. This fact is so notorious 
that nobody questions it. Speculation and gambling, 
dealing in large ventures and working for very large 
profits, induce, and in most cases force, those engaged 
in them to pay high rates of interest in order to obtain 
the money with which to float their speculative enter¬ 
prises from which they expect such large profits. As 
soon as speculation rules the money market, the rates 
of interest will therefore necessarily rise, and legitimate 
business, from which money is diverted by speculation, 
must conform itself to those high rates in order to ob¬ 
tain the money which it needs; and hence a general 
rise of rates. 

The fact that at the present moment loans are com¬ 
paratively easy in the money market has been referred 
to as contradicting this view. It does not contradict it at 
all. The crisis has crippled enterprise generally, and 
specially speculative enterprise. Speculation has had no 
time yet to recover and to produce its effects. Money 
is plenty in proportion to the present limited require¬ 
ment of business,and although we have had an addition 
to the currency of twenty-five or twenty-six million 
dollars, yet much of the money that makes up that 
addition, and more besides, is at the present moment 
lying idle. The addition has not exercised its in¬ 
fluence yet, but it will without doubt exercise that in¬ 
fluence and produce its effects soon. Speculation is 
already reviving; we observe it in the very western 
markets in the grain trade. It is reviving in New 
York, as everybody sees. It is reviving rapidly. If 
we inflate the currency we shall have much more spec¬ 
ulation than we had before; and with it. and with a 
further depreciation of our paper money, all the effects 
upon the rate of interest which I have stated will 
rapidly appear with all their oppressive consequences; 
and then those who clamor for inflation in order to give 
cheap money at low rates of interest to the people of 
the West and South will learn to their sorrow that an 
irredeemable currency is indeed not the people’s money 
but the speculator’s money, and that by extending and 
strengthening that pernicious system they have brought 
a curse and not a blessing upon those whose interests 
they pretend # to serve. 

XII. European Investments in America. 

A few days ago I received from a friend in Europe a 
most significant letter, to which an answer was request¬ 
ed. The writer is a merchant who desires to retire 
from business. He writes me to this effect: “lean 
realize out of my business several hundred thousand 
dollars, and should like to invest my money at a good 
rate of interest. , I have thought of investing it in the 
United States on mortgage security, which, as I am 
informed, bears from 8 to 10 per cent.; but I learned 
also that you are likely to inflate the currencv in the 
United States, which, of course, will result in deprecia¬ 
tion. I would now ask whether it would be safe for 
me to make such an investment in mortgage loans in 
the United States while there is a chance that your 
legal-tender money may depreciate so that I would 
lose more by the depreciation of capital invested than 
I would gain by the interest I might get.” 

I ask the Senator from Indiana what answer would 
he give, at this moment, to that gentleman who wants 
to send several hundred thousand dollars to the United 
States in order to invest them here ? 

He will probably give the same answer that the Sen¬ 
ator from Illinois, [Mr. Logan], has just given in an 
undertone, “Write him to send it on.” Let me tell 
Senators that we cannot very well expect foreigners to 
send along their money when the chances are that they 
will suffer loss in consequence of our own financial pol¬ 
icy. Senators, ought not to conceal from themselves 
that the credit of this country has most seriously suf¬ 
fered by the sale of stocks in Europe which have turned 
out to be worth far less than they were represented to 
be. I consider it my first duty as a citizen ot the Uni¬ 
ted States, as an American, to deal fairly and honestly 
with the foreigner as well as with the countryman; and 
as an American who has the honor of the country at 
heart I cannot afford to induce a foreigner to invest 
money in a venture concerning which I have such good 
reason to fear that it will be a losing business. I shall 
tell that gentleman, “Send your money here, and tell 
all your friends to send theirs as soon as we enter upon 
a policy that will be directed towards specie pay¬ 


ments,’’ for then I shall know that the value of the cap¬ 
ital so invested will be safe; but I should not consider 
it honest advice, did I tell him to convert his gold into 
our paper money, as long as there is danger that the 
paper money might be depreciated by inflation. 

Mr. Cameron. Does the Senator believe he would 
be swindling his German friends by advising them to 
send their money here and invest it in mortgages upon 
good lands, and good houses, and good buildings here ? 
Does he believe that all the people of this country are 
scoundrels, and that they want to get the money of Eu¬ 
rope here upon dishonest and fraudulent representations? 

Mr. Schurz. No, sir. 

Mr. Cameron. Does he not know that there is no 
part of the world in which money upon first mortgage 
upon real estate is so safe, so secure, as it is in the Uni¬ 
ted States, and in every part of the United States? 

Mr. Schurz. Yes, sir; I know all that. I know 
that for myself I would ask for no better security than 
a mortgage on real estate in the United States; but I 
know also, as every other Senator knows, that if I had 
to invest $100,000 to-day, with the prospect of an infla¬ 
tion of our currency, that $100,000 to be paid back to 
me in two or three years, when the premium on gold 
may not be 10 per cent but 50 per cent, I would be like¬ 
ly to lose nearly one-half of my capital, however good 
the security might have been on which that capital was 
invested. 

I would never hesitate to tell Europeans, “Send as 
much money as you can raise to aid us in developing 
our resources and to profit by it yourselves,” as soon as 
our monetary system is such as to give them reasona¬ 
ble security that when the loans fall due they will get 
the same value back which they invested. Now let me 
tell the Senator from Pennsylvania I was in Europe 
last year, and the people there have begun to under¬ 
stand this thing as well as we do. Wo must not indulge 
in the delusion that foreign capitalists will be eager to 
run the risks which a fluctuating currency imposes upon 
them ; and nothing is more natural than that, while we 
have that currency, many investments of European 
money are withheld which otherwise we might expect. 
In this respect the character of our currency must nec¬ 
essarily inflict a very serious injury upon us. 

Here is a man who asks me, “Can I, at the present 
moment, send over several hundred thousand dollars 
to be invested in mortgage securities in the United 
States, with safety as to the value of my capital, while 
you have a fluctuating, irredeemable paper money ?” 
That gentleman wants to profit by the rates of interest 
here prevailing; but above all things he wants to have 
the value of his capital secured. He will not distrust 
the mortgage, but he wants to know whether, when the 
debt falls due, the same number of paper dollars re¬ 
turned to him will be worth in gold as much as they 
were when he made the loan or mortgage. 

Mr. Cameron. The increase of real estate is always 
equal to any depreciation of the currency. 

Mr. Schurz. But, sir, the increase of real estate in 
value does not increase the amount of the mortgage as 
the Senator knows, just as well as every child in the 
country knows. And, therefore, I say so long as the 
foreign investor cannot be sure that hu will have re¬ 
turned to him the same amount of capital he wiil not 
invest; it is useless for gentlemen to close their eyes to 
the fact. It is one of the results springing from our 
irredeemable paper money. It is so, and it cannot be 
otherwise. If the Senator is answered, and I think he is. 

Mr. Cameron. The Senator has not answered my 
question at all. The special proposition was that these 
people expected to put their money in mortgages on real 
estate. I say that no one who has ever invested upon 
a first mortgage on property at current rates in this 
country has ever lost by the investment. 

Mr. Schurz. The Senator cannot have so com¬ 
pletely misunderstood me as to think that I expressed 
the least doubt of the safety of mortgages in the United 
States. If I were worth $10,000,000 and had it all to 
invest in loans, I would ask for no better security than 
mortgages on real estate in the United States. Tho 
question is this: whether a man investing a certain sum 
in mortgages, when he retires his capital two or three 
years hence, will not by the depreciation of the curren¬ 
cy lose 20 or 30 or 40 per cent of the value of his capi¬ 
tal; whether the dollar that he invests now will be 
worth just as much when that dollar will be returned to 
him ? The Senator from Pennsylvania certainly knows 
that when an irredeemable currency is inflated, the ef¬ 
fect will be its depreciation ; that when he to-day can 
buy a dollar in gold for §112 in currency, if we expand 
the currency at the rate of $100,000,000 or $200,000,000 
more he will have to pay $1.25 or $1.30 in currency for 
a dollar in gold ; in other words, while a dollar in cur¬ 
rency may be worth eighty-eight cents in gold, if we in¬ 
flate the currency it may be worth then seventy five or 
seventy or sixty cents; and, old and successful finan¬ 
cier as the Senator is, he is too world-wise not to under¬ 
stand that when I invest eighty cents and get only six¬ 
ty cents back, I shall be a loser by twenty cents. 

XIII. American Credit. 

There are persons, I fear, who are depreciating the 
credit of the country. They are those who want to con¬ 
tinue a money system which introduces into ail trails - 












20 


THE FINANCIAL RECORD. 


actions of business the element of chance and decep- 1 
tion; a money system which by that deception injures 
not only the foreigner who may invest his funds here, 
but our own people ; a system of irredeemable paper 
money which has time and again fallen under the con¬ 
tempt of civilized mankind. Those, I say, are depre¬ 
ciating the credit of the country who in the very midst 
of the nineteenth century, with all the lights of universal 
experience around them, still strive to maintain, to con¬ 
firm, and to perpetuate a disgrace like that. I tell the 
Senator from Pennsylvania 1 can think of nothing that 
would be better ^calculated to elevate the American 
character and to raise tne credit of the country in the 
eyes of the world than a speedy deliverance from that 
system. Why is it, I would ask, that these national 
bonds of ours, than which there is no better security in 
the world, do not rise higher than they have done? 
Why is it that they do not keep pace, in proportion 
to the respective rates of interest with the best European 
securities ? Si mply because so long as we have this false 
system of irredeemable money, there is still lurking in 
the minds of men a secret suspicion that, by some trick or 
other, the national debt may still be paid off with de¬ 
preciated greenbacks; and when I say that, I know 
whereof I speak, for I heard it a hundred times, to my 
own shame and to that of my country. I know that sus¬ 
picion is wrong, absolutely groundless ; but I consider 
it my duty as a candid man, to tell you that such a sus¬ 
picion exists. I have now indicated how the credit of 
the country can be raised and how it is depreciated. 

But there was one remark which fell from the Sena¬ 
tor from Pennsylvania which really surprised me. He 
said that the people of Europe took hold of only such 
loans as were made in their immediate neighborhood. 
Has he forgotten that during our war hundreds of mill¬ 
ions of our bonds went into Germany, and were readily 
taken there, while the destinies of the United States were 
still trembling in the scale of battle ? Has he forgotten 
that? Does tie not know that the European countries 
have been tairly flooded with our railroad securities? 
Can he count the millions of capital that came from 
Europe with which so many of our enterprises were 
floated, that could not find ready and sufficient capital 
at home ? 

Mr. Sherman. I wish to recall to my friend’s mind, 
a fact that is known to me, and no doubt known to 
him, that on account of the uncertainty of the value of 
our paper money, its constant appreciation and depre¬ 
ciation, nine-tenths, perhaps ninety-nine one-hun¬ 
dredths, of all the loans now made in Europe to this 
country, both principal and interest, are required to be 
paid in gold. 

Mr. Schurz. It is a fact as notorious as sunlight; 
and therefore I express my surprise that so old a finan¬ 
cier as the Senator from Pennsylvania, should question 
it in the least. 

XIV. Interest in the West. 

The other day I received a letter from Omaha, 
in Nebraska, complaining very much that interest 
ranges there at 12 to 24 per cent, while in Boston and 
New York at, as the letter stated, it ranged only from 6 to 
8. This is undoubtedly true. In New York and Boston 
we can hear exactly the same complaint, that interest 
ranges there from 6 to 8 per cent, while in London and 
Amsterdam it ranges from two to three ; and the reason 
of the difference between Omaha and Boston, and be¬ 
tween Boston and Amsterdam, is exactly the same. 
In London and Amsterdam there are iarge accumula¬ 
tions of loanable capital; centuries have been spent in 
piling it up; larger accumulations of loanable-capital, 
than in New York and Boston. And in New York and 
Boston there are larger accumulations of loanable capital 
also the growth of centuries, than in Omaha and Nebras 
ka, or in Hannibal in Missouri. Now, if we could trans¬ 
port the accumulation of wealth existing in Amsterdam 
and London bodily to New York and Boston, then the 
rate of interest in the latter places would not be any long¬ 
er 6 and 8 per cent, but it would be 2 to 3 per cent; and 
if we could transport all the accumulated wealth of 
New York and Boston to Omaha and Hannibal, then, 
in all probability, the rate of interest there would cease 
to be 12 to 24 per cent, and it would range at 6 to 8. 
But the same effect cannot be produced any other way 
than by the gradual creation aud accumulation of 
wealth. The accumulation of capital and consequent 
low rates of interest are the result of the work of gen¬ 
erations. It cannot be created by the establishment of 
banks, or by the issue of paper money; and the idea 
that it can be done by the printing of irredeemable 
paper money is so absurd that every baby can see if. 
Still more preposterous is the fabulous notion that we 
can issue paper money enough to secure to every body 
who wants it a loan, or to discount every man’s note 
at as low a rate of interest as he desires. It is indeed 
incredible that such propositions should be seriously 
advanced and advocated on the floor of the Senate of 
the United States. Why, we might as well in the short¬ 
est way solve the problem by saying: Let every man 
issue his note for all his debts, past, present, and pro¬ 
spective ; and then let us enact a law making that note 
legal tender. 

XV. Theory and Fact. 

And now, sir, when I have demonstrated by fact and 


reason, so that every child might understand them, 
propositions like these, that capital and currency are 
two very different things: that the wealth of a country 
is not augmented by printing more paper money; that 
when popular confidence in the issue of irredeemable 
paper money is unimpaired the constant depreciation of 
that paper money demonstrates its excess in quantity 
over and above the real requirements of legitimate 
business ; that such a currency may in the aggregate be 
superabundant and yet an insufficiency may be felt in 
certain localities and certain branches of business in 
consequence of a vicious diffusion; that this vicious 
diffusion, springing in part from the natural effects of 
an irredeemable and redundant currency, cannot be 
cured but will only be aggravated by inflation; that the 
gambling risk inseparable from an irredeemable and 
fluctuating currency will drive up prices as well as the 
rates of interest; that the rate of interest depends on 
the existing amount of real capital in a loanable form 
and its proportion to the demand for the use of that 
capital, and can therefore not be lowered by an infla¬ 
tion of an irredeemable currency, but will be raised 
by the increased element of risk ; that for such reasons 
the remedies for existing evils proposed by gentlemen 
who favor inflation are not only no real remedies at all, 
but mere quack medicines, which will only aggravate 
the element; when all this is demonstrated, gentlemen, 
on the opposite side mount the high horse and say : 
“Why all this is mere theory; you are mere abstrac¬ 
tionists. We are practical men, which you are not; 
you look into books, but we look into the living active 
business of the country ; we trust the evidence of our 
senses ; we open our eyes, and see what is going on, 
and from what we see we draw our conclusions, and 
upon what we see we build our theories as to reme¬ 
dies.” Away, then, with all those great thinkers 
upon whom the world has so long looked with pride; 
away with Adam Smith and John Stuart Mill and 
Ricardo and Bonamy Price. Away also with our own 
Thomas Jefferson and Hamilton and Gallatin and 
Crawford. 

We have now among us a new school of political 
economists who know better. With the Senator from 
Indiana, they exclaim: “Throw theory to the dogs,” 
as he said the other day; and it must be admitted 
they have thrown theory to the dogs most effectually. 
They rely upon nothing but the evidence of their 
senses, and how can that lead them astray ? But I 
suspect there is after all something in the principles of 
political economy, in that science of finance, which is 
the accumulated wisdom and experience of many cen¬ 
turies, although the practical statesmen of the old 
Tatum school cannot see it and are ready to throw it 
to the dogs. Throw it to the dogs, Senators, and I 
fear, the honor as well as the prosperity of the country 
will soon go the same way. 

XVI. Inflation a Curse to the Poor. 

When all other resources fail, when even a contemptu¬ 
ous sneer at book-learning and theory will no longer 
avail, the advocates of inflation grow fearfully pathet 
ic in calling the opponents of their fallacious doctrines 
enemies of the poor, supporters of the rich, friends of 
the oppressors, of the money-changer, of the wicked 
speculator, and so on. Is, then, the inflation of irre¬ 
deemable paper money really a help to the poor ? Can 
it be ? Can any sensible man pretend for a moment 
that it can be ? It has been well said here that the 
rich man is always able to take care of his interests ; 
and so he is. He can provide for his own welfare, 
whatever the vicissitudes of trade and the fluctuations 
of values may be. for he has the means to take advan¬ 
tage of every change. Is the currency inflated and 
does it depreciate ? He speculates upon a rise of 
prices. Is the movement in the opposite direction? 
He speculates upon their fall. He stands upon that 
eminence where he can see the storm coming and dis¬ 
cern in what direction it will blow. He can bend be¬ 
fore it and rise up when it is over. He can watch his 
chances, and he has the means to turn them to his ad¬ 
vantage. He commands the situation, and can take 
care not to become its victim; and he covers his risks 
by making the poor man pay their cost; for the poor 
man, living from hand to mouth on his daily earnings, 
is the slave of his necessities. The vicissitudes of the 
great business world overtake him unawares, for he 
has not the opportunity to watch the workings of hid¬ 
den forces ; and even if he had that opportunity, what 
means would he have to avail himself of this knowl¬ 
edge? What means to provide for the changes of 
fortune? He cannot, amid the fluctuations of values, 
speculate on a rise or on a fall; what he receives 
for his labor he has to use at once just as he receives 
it, for bread to feed his family, or for clothing to cover 
them ; or if he saves anything, his savings may depre¬ 
ciate in his own hand while that holds them, small as 
they are : and what means has he to make up for the 
loss? His savings are too small for speculative opera¬ 
tions. The great steamer of five thousand tons ijiay 
defy the storm and break her course through the an¬ 
griest sea with scarcely impeded strength, but the 
poor fisherman’s boat is helpless against the gale, and 
without resistance dashed upon the rocks by overpow¬ 
ering waves. The poor man is the helpless victim, and 
nothing but the victim, of that tricky game which a 


| fluctuating paper money enables the rich to play with 
the poor man’s fortunes. 

You speak of the distress of those who this day are 
without work and without bread. What has caused 
that distress? It was caused by a crisis, a collapse of 
speculation, grown up under the auspices of that same 
paper-money system which you now strive to confirm 
and strengthen in all its iniquitous influences to bring 
on other crashes and collapses; and wfoo will be the 
man to be ground to powder by them? The poor 
man, not the rich. What is it that rises last when 
your paper system drives up prices? The laboring 
man’s wages. What is it that drops first when your 
bubbles of paper speculation burst? The poor man s 
earnings. You speak of reviving confidence, and, 
with confidence, enterprise, by new issues of paper 
money, and yet that very confidence has been de¬ 
stroyed by the very agency of that paper money ; and 
confidence does not revive to-day for fear of pew fluc¬ 
tuations and new uncertainties. You talk of debtors 
and creditors, debtors being benefited by inflation, 
and creditors by the resumption of specie payments. 
Let me ask you, who are the debtors, and who are the 
creditors of this countrj' ? Look at the savings banks 
of this country, and what do you see there ? Seven 
hundred and sixty million dollars of deposits. Who 
are the depositors ? Not the rich, but the poor man, 
who earns his bread by the sweat of his brow ; the 
man of small means, who puts there for safe keeping 
his small surplus earnings. The same class have in 
national and State banks, and in trust companies, as 
has been estimated by good authority, two hundred 
millions more ; and another two hundred and fifty mil¬ 
lions are owing to the same class in the shape of un¬ 
paid wages and other debts. There are twelve hundred 
millions, then—twelve hundred millions of debt—rwing 
to the laboring men and the men of small means. 
And now, I ask you who are advocating the inflation 
of the currency, what are you doing to those poor peo¬ 
ple; what are you doing with their twelve hundred 
millions of money ? Inflate the currency, and by irT- 
flation depreciate it, and you will diminish the value 
of these twelve hundred millions 10, 20, 80 per cent. 
And now boast of being the friends of the poor while 
you advocate a policy that will rob the poor of the 
land of so large a proportion of their hard-earned 
property! 

XVII. Repudiation and Inflation. 

I have seen and heard this kind of thing before. 
About seven or eight years ago some politicians thought 
it would be a very popular idea to repudiate our duty, 
to pay the national bonds in gold; they proposed to 
issue the necessary amount of greenbacks to pay 
off the national debt in a depreciated paper, in the 
cheapest possible money. They thought the people 
would jump at the chance of thus getting rid of a very 
onerous burden. Well, sir, what was the result? At 
first the proposition seemed to become quite popular in 
some quarters, and politicians of both parties—who are 
always ready to run after a popular cry, right or wroDg, 
and always think what they think the people think— 
saw there a chance of a profitable game for themselves. 
They advocated the scheme, or at least did nothing 
against it. They thought they could not afford to op¬ 
pose it. Well, sir, here is a piece of my personal ex¬ 
perience. In the presidential campaign of 1868 I was 
invited to make speeches in the State of Indiana. 
When I came into that State I was met by some poli¬ 
ticians who told me, “0, now we want you not to say 
anything in your speeches against that greenback 
scheme; the people of Indiana are almost universally 
in favor of it; they want to get rid of this heavy debt; 
they do not want to pay the bloated bondholder in 
gold;” and so on. I replied: “III cannot say about 
the greenback scheme what I please in this canvass, I 
will not speak in Indiana at all." After some hesita¬ 
tion those politicians consented that I should proceed ; 
but they watched me with great trepidation. Well, I 
did speak my mind, and in every speech I denounced 
the greenback’scheme as a most rascally conception, 
and I insisted that it was the sacred duty of the Govern¬ 
ment to pay to the national creditor every farthing ac¬ 
cording to the letter and spirit of the law. And there 
were the people of Indiana before me, who had been 
represented to me as being fairly wild on the subject of 
the greenback scheme. What was the result? No 
declaration in my speeches was more heartily applauded 
than just this, and that applause came from the same 
people whose weak-kneed politicians had represented 
to me as all on Srefor repudiation. Ah, sir, those mis¬ 
calculate their chances who think they can safely spec¬ 
ulate upon the rascally instincts of the American people. 
The inflation cry will go the same way the repudia¬ 
tion cry has gone. I am convinced the inflation cry 
will be one of the most short-lived cries this country 
ever heard ; and I am not much mistaken when I say 
that those who advocate inflation in this body must 
make hot haste to commit the Senate to that iniquitous 
doctrine, or the last semblance of popular support will 
drop away before the decision is reached. No, sir; 
it is not the people, it is the speculators and their de¬ 
luded victims, who are continually dinning the cry of 
inflation into our ears, and so it will become manifest 
to every one who has eyes to see and ears to hear. 











sociation was in his charge, and he maintained an extensive correspondence with our members and other persons interested in 8ocial Science, in this 
country and in Europe. This correspondence ha9 made us acquainted with important movements in various parts of the country and abroad, and has 
often enabled us to contribute as well as to receive important information. The then existing department committees on Education, Health, and Ju- 
risprudence, held meetings and considered pressing questions ; the Health Department being particularly active. Besides its business meetings, it 
held a Conference in Boston, in the spring, for the special discussion of the management of Insane Asylums, which was largely attended by persona 
competent to treat the subject. A Conference on the Prison question was held in Boston at the instance of the Executive Committee, about the same 
time,—one of its objects being to aid in the passage of a bill establishing distinct prisons for women, then before the Massachusetts Legislature. 

It is not chiefly, however, as the advocate of measures to be carried, that the American Social Science Association appears before the public. 
Its duty is rather to furnish a laboratory for investigations, an arena for discussions, a registry for facts and experiments, a bureau for questions and 
answers, in regard to the multiform matters coming under observation in our five present departments or sections, of Education, Health, Jurispru¬ 
dence, Finance, and Social Economy. It will therefore be one of the main objects of the Executive Committee, carrying forward the work already 
begun, to put themselves in communication during the current year with as many organized bodies and individual inquirers as possible, and to obtain 
from them existing facts concerning the application of Social Science in any of these departments. To this end the Secretary is corresponding with 
Boards of Education, of Health, of Trade, and of Public Charities; officers of prisons, and reformatories, managers of other public establishments, 
employers of industry, experts in matters of revenue, currency, taxation, transportation, the distribution of products, etc.,—in short, with such persons 
as may be supposed capable of enlightening the Association, and through it the American public, concerning the matters with which Social Science 
deals. What is thu9 acquired is to be published from time to'time, in such ways as are open to the Association, and with more regularity and fre¬ 
quency than heretofore. 

Another feature of our work for 1874 will be the formation of local committees or branch associations in different parts of the country, through 
which the parent association can reach more readily the sources of information and of influence in each locality. Such an association has long ex¬ 
isted and has done much useful work in Philadelphia; others are now formed or forming in St. Louis, New Haven, Conn., San Francisco, Galveston 
and Detroit, and efforts are making to establish State Associations in Pennsylvania, Ohio, Iowa and Wisconsin. A plan for the uniform establish¬ 
ment and operation of such Branch Associations is now under consideration by the Executive Committee. We also aim to establish intimate 
relations with special organizations working in the various departments of Social Science, such as Health Associations, Prison Associations, Conven¬ 
tions of Teachers, of Superintendents of Insane and Inebriates Asylums, and other specialists; in order that there may be good understanding and 
hearty co-operation between these several agencies and our own. 

To do this, or any other work of the kind, successfully, we need many members in all sections of the United States, and that these members 
shall do what they can to further the objects of our Association. We ought to have at least a thousand members, who should contribute the desired 
amount (not a large one) for the purpose of maintaining the Association in a state of useful activity, and among whom should also be prepared, in 
each year, papers on the subjects claiming discussion at our general meetings, and at the meetings of departments and of branch associations. The 
British Association for the same objects, antedating ours by eight years, numbers now nearly a thousand members, and has attained a prominent 
position as an aid to legislation and to the promotion of measures for the good of society. It is the hope and will be the effort of the Executive Com¬ 
mittee to make the American Association worthy of comparison with its British prototype. 

The general expenses are met by the annual subscriptions of members. The annual membership assessment is Five Dollars, the payment of 
which entitles the subscriber to receive the publications of the Association for the year. Life Memberships of $100 each, and donations of various 
amounts, have hitherto sufficed to meet the expenses of printing, which are necessarily large. 

An extended membership, as an essential means for the efficient prosecution of the work of the Association, is cordially invited. Subscriptions 
may be remitted to J. S. Blatchford, Treasurer, 13 Exchange Street, Boston, Mass. 

THE GENERAL MEETING OF 1874. 

The customary General Meeting of the Association will take place this year at New York, from the 19th to the 23th of May. The 
persons engaged to read papers, with their subjects, so far as determined upon, are as follows. Others have been invited, and the whole number of 
addresses and papers will probably exceed Twenty. 

• 

1. An Address by the President, George William Curtis, Esq. 

2. By Rev. T. D. Woolsey, LL.D., of New Haven, a Paper on some topic of International Law- 

8 By David A. Wells, Esq., of Norwich, Ct, a Paper on "Taxation.” 

4. By Hon. Andrew D. White, of Cornell University, a Paper on "The Relation of National and State Governments to Advanced Education.” 

6. By D. C. Gilman, President of the University of California, a Paper on “California and its Relations with the other United States.” 

6. By Gardiner G. Hubbard, Esq., of Cambridge, a Paper on “ American and European Railroads.” 

7. By Willard C. Flagg, Esq., of Moro, Ill., a Paper on “The Farinas' Movement in the Western States .” * 

8. By William W. Greenough. Esq., of Boston, a Paper on “ Public Libraries.” 

9. By Z. R. Brockway, Esq., of Detroit, Mich., a Paper on “ The Reformation of Prisoners." 

10. By Dr. J. Foster Jenkins, of New York, a Paper on “Tent Hospitals 

11. By Gamaliel Bradford, Esq , of Boston, a Paper on “The Future of Parties." 

12. By Hon. Charles A. Buckalew. of Bloomsburg, Pa., a Paper on “The New Pennsylvania Constitution ." 

13. By Dr. Alfred L. Carroll, of New York, a Paper on “Sanitary Science in Schools and Colleges.” 

14. By Professor William G. Sumner, of New Haven, Ct., a Paper on some Financial subject yet to be named. 

15. By Dr. Albert Day, of Boston, a Paper on “The History and Results of Inebriate Asylums in America.” 

16. By the General Secretary, F. B. Sanborn, a Report on “The Work of Social Science in the United States.” 

17. Reports on Special Topics by each of the five Departments; that from the Department of Social Economy will relate to “ Pauperism 

in the City of New York.” 

It 19 also proposed to hold, in connection with the General Meeting, a Conference of the Boards of Public Charities in the United States, and 
another Conference of the State Boards of Health, and of those established in the large cities. The iength of the Meeting is fixed at Four Days, 
which would allow about five papers for each day,—say four for each day session, and two for each evening session of three days, leaving one day 
free for other occupations. It is proposed to allow half an hour for the reading of each Paper, and half an hour for its discussion—besides one half 
day devoted to general discussion of such topics as prove to be of the greatest interest. A few persons, say two for each Paper, will be invited to 
discuss it in speeches of ten minutes each, leaving ten minutes on each Paper for the members who may wish fo speak. If found necessary, the 
Meeting will divide into sections. It will be held in the Hall of the Young Mens’ Christian Association, (23d Street, corner of Fourth Avenue.) 







FINANCIAL RECORD. 

“WE NEED ONE THING BESIDES MORE MONEY, AND THAT IS BETTER MONEY ."-Senator Each. Chandler. 

. ■ - - - r 

VOL. I. THURSDAY, APRIL 2, 1874. HO- 9. 


Thk Financial Record will be published weekly three 
months, and may be continued beyond that period It will 
be, as its name indicates, a record of facts and opinion- on 
the questions of National Finance whicli are now so impor¬ 
tant to the American people; and all persons,editors or others, 
to whom it is sent, are invited to use itfreely, and to copy from 
it without hesitation if they see tit. It will be sent free of 
postage, to all persons who will remit 50 cents to the publishers 
at No. 5 Pemberton Squire, Boston. All editors who may re¬ 
ceive it are iuvited to send their papers in exchange. 

Spirit of Congress. 

Last week we referred very briefly to the action of 
the Senate (March 26) on tbefinance committee’s bill, 
under the ten minutes rule. Many short, and some ex¬ 
cellent speeches were made. Mr. Fenton gave expres¬ 
sion to a very general feeling, when he remarked that 
the great want throughout the discussion had been “a 
clear voice from the Treasury Department and the Ex¬ 
ecutive Mansion ; a bugle note, if you please, sounding 
the policy of a campaign for a restored money condi¬ 
tion.” Mr. Howe, who always speaks sound sense on 
this question, and generally votes the other way, de 
monstrated the folly of inflation in a short and admira¬ 
ble speech. Mr. Thurman said, in regard to the issue of 
notes above $156,000,000, that he had never seen a 
legal question on which his mind was clearer than upon 
this. It was an act in violation of law. Mr. Ferry (Ct.) 
said that the great mistake was in 1862. The greenbacks 
should never have been issued at all, and ‘‘that now, 
when there is no pretence of necessity, for the govern¬ 
ment of the United States deliberately to authorize an 
increase of irredeemable paper currency is to dishonor 
the nation at home and abroad, to open the flood gates 
which no man can shut; and which will inevitably be 
followed, even from the little beginnings set in the first 
section of this bill by further issues, until the na¬ 
tion shall have gone the rounds of the older na¬ 
tions of the world through issues unbounded of irre¬ 
deemable paper, landing in universal bankruptcy, and 
compelling the nation to begin again on the sound rock 
of a currency based on gold and silver.” 

The votes recorded last week were then taken. The 
declaration in favor of the four hundred million limit 
having been o ade, Mr. Merriinon moved to substitute 
a bill which added anstncrease of national bank issues, 
to the amount of S46.0J0,003. To this Mr. Logan of- 
ferred an amendment providing for free hanking. Mr. 
Morrill (Vt) moved to add to the original hill a proviso 
that no part of the notes shall be used in buying bonds 
above par, nor for the current expenses of the govern 
ment. In the fac; of these new amendments the Sen¬ 
ate adjourned. The debate was resumed Friday, rirst 
on Mr. Morrill’s amendment. Mr. Morton moved to 
strike out the second section of the bill, which provides 
for the redemption of the greenbacks in gold or five per 
cent bonds, on the first of January, 1876, but the Senate 
adjourned til! Monday without taking a vote. 

On Monday the Senate adopted Mr. Morton’s propo¬ 
sition, 28 to 23. There were seven pairs,so that 65 out 
of 72 Senators were represented. Mr. Pratt, of Indiana, 
voted in this case with the hard money men, and Mr. 
Howe with the inflationists. Otherwise it was a test 
vote. Mr. Scott then moved to amend Mr. Merrimon’s 
proposition by providing for redemption of greenbacks 
in five per cent, bonds after January 1, 1877. It was 
rejected, 6 to 37. Mr. Frelinghuysen moved an amend¬ 
ment to provide that the surplus revenue shall he used 
to accumulate gold coin; that $59,000 000 of ten year 
five per cent bonds be sold for gold;, and that this gold 
he used to redeem legal tende s, the Secretary being 
also empowered to redeem the notes with bonds; the 
time of redemption to be fixed by the President and 
the Secretary of the Treasury. Rejected, 14 to 29. 
Mr. Morton moved to strike out the fourth section of 
the original bill providing for a simultaneous issue of 
banknotes and contraction of greenbacks. 

On Tuesday, Mr. Morrill, (Vt.) moved to amend 
the fourth section so that 99 (instead of 70) per cent of 


the new issues of banknotes shall be withdrawn from 
the volume of greenbacks. Rejected, 20 to 37. Mr. 
Morton’s amendment to strike out the fourth section 
was then carried by 29 to 27; Mr Windom being the 
only inflationist to vote against it. Mr. Gordon wished 
to provide that the present bank circulation in Maine he 
taken as a standard; all States to establish new banks 
until they reach this standard. This amendment Mr. 
Logan adopted in place of his own. Mr. Fenton's 
amendment establishing a system of redemption was re¬ 
jected, 14 to 37. Mr. Buckingham twice renewed his 
amendment in a new form, and it was twice more re¬ 
jected, by 7 to 39. and 21 to 30. 

On Wednesday, Mr. Jones, of Nevada, delivered, im¬ 
promptu, his maiden speech against inflation, one of the 
ablest speeches yet made. To-day (Thursday) Mr. 
Meirimon proposed an increase of §46,000,000, with¬ 
drawing no currency from any State; carried, 33 to 19, 
the inflationists being reinforced by Messrs. Davis and 
Sherman. 

The discussion was continued on Wednesday and 
Thursday, by Phelps (N. J.), Hawley (Ct.)and others, 
against inflation. Mr. Kelly gave notice that lie should 
offer his 3.65 bill as a substitute, and Messrs. Dawes, 
Butler and G. F. Hoar (Mass.) took part in a personal 
explanation. No important action was taken in either 
branch. 

The House began a discussion of the currency ques¬ 
tion March 26, by considering whether it would not be 
better to vote at once without debate; but it was thought 
better to make a show of discussion. Three inflation¬ 
ists, Messrs. Maynard, Durham and Farwell, then made 
speeches, and the droll Mr. Cox gave notice of an 
amendment to make each one dollar greenback legal 
tender for three dollars, and multiplying the legal value 
of all other issues in the same proportion. There have 
been more speeches since, on both sides, but the able 
speech of Mr. Mitchell of Wisconsin, on the 27th., was 
the only interesting one. (From this we shall have 
occasion to quote ) 

Are tbe Forty-Four Millions Constitu¬ 
tional Money? 

A valued correspondent at Pittsburg, Pa., thinks we 
have stated too strongly, in The Record of March 7, the 
argument against the constitutional power to re-issue 
the $44,000,000 of canceled greenbacks. Our language 
was : 

“It is unconstitutional The clause making paper a legal 
tender can only be justified by a state of war. The 
Supreme Court sustained its validity only as an exer¬ 
cise of a war power.” 

This our correspondent calls “a popular but palpable 
error,” and adds : 

The Supreme Court in examining the question 
whether the power to issue a legal tender currency ex¬ 
isted in Congress, came to the conclusion that in cases 
of great emergency, as (for example) a state of war, 
such power did exist, and they aiso decided that Con¬ 
gress (not the judiciary) were lo judge where such ex¬ 
igency existed. So it follows that it is constitutional 
to issue legal tenders whenever Congress shall think an ex¬ 
igency requiring the exercise of that p n wer exists. The ex¬ 
pediency of the exercise of that power at. this time 
is another question. I am as much opposed to any 
new issue of any irredeemable currency as you can be, 
and believe the present issue of the $44,000,000 by the 
Secretary of the Treasury is illegal. 

We are glad our Pennsylvania friend has called at- 
tention to the matter, for the case is really stronger 
against the new issue than he or the general public- 
seem to imagine. There have been two legal-tender 
decisions by the Supreme Court, the first, Hepburn 
vs. Griswold, (8 Wallace, 603,) decided December, 1858, 
in which five judges declared "that Congress had not 
the constitutional power to make greenbacks a legal- 
tender for preexisting debts, three judges dissenting; 
and the second, Knox vs. Lee and Parker vs. Paris, (12 
Wallace, 457,) heard and determined together, Decem¬ 


ber, 1870, in which five judges held these notes to be a le¬ 
gal-tender as well for debts contracted before they were 
issued as for debts contracted afterwards, four judges 
holding them not to be a legal-tender in any case. 
Judge Strong, in giving the opinion of the majority in 
the latter case said undoubtedly, as our correspondent 
intimates: 

Nor do we assert that Congress may make anything 
which has no value money. We do assert this ; that 
Congress has power to enact that the government s prom¬ 
ises to pay money shall be for the time being, equiva¬ 
lent in value to the representative of value deter¬ 
mined by the coinage acts, or to multiples thereof. 

Very good; now under what conditions has it this 
power ? Justice Bradley, one of the five, said in this 
case: 

It is, nevertheless, a power not to be resorted to ex¬ 
cept upon extraordinary and pressing occasions, such 
as a war or other public exigency ot great gravity or 
importance, and should be no longer exerted than all 
the circumstances of the case demand. 

In Hepburn vs. Griswold, Justice Miiler, another of the 
five, said: 

The legal-tender clauses of the statutes under consid¬ 
eration were placed emphatically, by those who enacted 
them, upon their necessity to the further borrowing of 
money and mainta ning the army and navy. It was 
done reluctantly, and with hesitation, and only after 
the necessity had been demonstrated, and had become 
operative. Our statesmen had been trained in a school 
which looked upon such legislation with something 
more than distrust. The debates ot the two Houses 
of Congress show that on this necessity alone could 
this clause of the bill have been carried. 

Now if either of these two judges had gone over to 
the minority in the case decided, the court would 
have held all legal-tender enactments unconstitutional; 
and the reason given by both, and particularly by 
Justice Miller, for coinciding with Justice Strong, 
show that they did not believe Congress has the 
power to issue such money except in the exigency 
of war, or its equivalent, and no such exigency is now 
even claimed to exist. Thus we have four judges out 
of nine asserting that under no state of circumstances 
did Congress possess the constitutional power to make 
these notes legal-tender even for debts contracted after 
the issue; while the five judges who maintain the power 
in Congress to declare them legal-tender place this 
right upon the extreme necessity of the government 
during the war. Where, then, do those who favor 
making at this time an additional issue of these notes 
find the constitutional authority for so doing? For 
it must be remembered that a power to be constitu¬ 
tional, must be expressly given or necessarily implied, 
Congress has no right to infringe upon the privileges of 
stares or of individuals, on the same plea that Jona¬ 
than Wild’s parson used in favor of drinking punch, 
that it was “a liquor nowhere spoken against in the 
Scriptures.” It is not to be maintained that our politi¬ 
cal Scriptures meant to encourage financial drunken¬ 
ness. 

Notes from tbe West. 

By an oversight which we greatly regret, we set 
down the St. Louis Globe among the newspapers favor¬ 
ing inflation. It is really on the side of honest money. 
According to the Lansing (Mich.) Republican, only 
eighteen of the Michigan newspapers openly favor infla¬ 
tion, while fifty-three, and among them all the more influ¬ 
ential ones in the State, oppose inflation. The Michigan 
people agree with their old statesman, General Cass, 
who wrote a letter in 1842 declaring that his “residence 
in France, and careful observation of the state of that 
nation, satisfied him that a sound specie basis is essen¬ 
tial to the permanent prosperity of the people.” So 
think the Scandinavian Americans also, for the Nya 
Werlden, a Swedish paper of large circulation, pub¬ 
lished at Chicago, says the demand for “more green¬ 
backs,” is like the demand of a man with delirium tre¬ 
mens for “more brandy." The Germans of the North 
























THE FIHAHCIAL RECORD. 


22 


West are reported to be against inflation, and inclined 
to follow the lead of Carl Schurz in that matter. The 
announcement of the President’s intention to veto any 
scheme for inflation disturbs the Western Republicans 
who follow the lead of Senator Logan; while Senator 
Thurman’s conservative attitude, rouses the Cincinnati 
Enquirer and the other followers of Mr. Pendleton to 
great bitterness of denunciation. As Mr. Thurman is 
talked of by the Democrats as their candidate for Pres¬ 
ident in 1876, his position is one of much interest to 
that party. 

. Spirit of the Press. 

The New York press is nearly unanimous in its denun¬ 
ciation of the House inflation bill. The Tribune says 
“There is no man living who can make but the wildest 
guess at what the legal-tender dollar will be worth three 
years hence,” and that “national dishonor cannot co¬ 
exist with national prosperity.” The Herald expresses 
the belief that “people must give their gram, their cat¬ 
tle, their services, for pieces of money printed over with 
the promise to pay dollars, which promise there is now 
not the remotest possibility wili ever be kept,” and that 
the party responsible for this state of things “is utterly 
immoral and rotten, audits obliteration is the only hope 
and safety of the country.” The World says the House 
of Representatives has taken “another and an irrepara¬ 
ble step down hill to the abyss of repudiation, which 
disgraces even the ignorance and the cowardice of the 
Forty-third Congress; it dishonors the United States.” 

The Times, as usual, takes a partisan view of the cri¬ 
sis, saying: 

If Congress yields to the demands of the inflationists, 
the Republican party will suffer ihe consequences. 
This may seem a low motive to which to address our¬ 
selves, but we do not so regard it. For the time being 
our party is the Government. If it err, the Govern¬ 
ment feels the effect. In saving it from error, its lead¬ 
ers serve the entire community. It is their business 
and their duty to look to its future, and to keep it as 
efficient as may be for whatever task may be laid upon 
it. We are convinced that, in the long run, nothing 
will cripple the Republican party like surrender to the 
inflationists. Inflation is bound to bring financial dis¬ 
aster, sooner or later, and when financial disaster comes 
the people turn, as one man, upon the party in power. 

[From the Chicago Tribune.1 

The House of Representatives, after four months of 
deliberation and debate, have acted on the question of 
inflating the currency. The actual inflation, ($18,000,- 
000), will hardly exceed the ordinary average currency 
balance kept in the Treasury. The increased issue 
will be but a drop in the inflation bucket, and, while it 
will serve to exasperate all those who know that wealth 
cannot be created by multiplying bits of paper, and that 
injustice is sure to be committed, it will not satisfy the 
other side. So that, after all the labor, the House has 
resolved to impair the national credit by making a 
forced loan in time of peace, and yet has done nothing 
to appease the appetite of those who want to pay fifty 
cents on the dollar, and has done this in direct violation 
of the platform of the dominant party. It will be ac¬ 
cepted by the world as an actunpreeedented'in the his¬ 
tory of Governments. There is no example of a nation 
in time of profound peace, in the midst of general 
prosperity, free from internal dissension and external 
menace, resorting to a forced loan of $44,000,000. The 
issue of irredeemable paper, in the absence of any na¬ 
tional danger, peril, or necessity, will stand in history 
as a perpetual reproach to the intelligence and patriot¬ 
ism of the Congress that authorized it. 

[From the St. Louis Globe.] 

When that voluminous History of Human Folly 
comes to be written, the financial debates in Congress 
will fill many of its pages, and there will be very little 
to cut out of the record. There is hardly any possible 
change in our financial policy which has not been pro¬ 
posed in one House or the other, and at last the discus¬ 
sion narrows down to whether the Government shall 
leave its outstanding dishonored notes as they are, at 
about S390,000,000, or whether it shall quite unneces¬ 
sarily increase them by $10,000,000 or diminish them by 
$31,000,000; one House in sheer desperation, says run 
the amount up to $400,000,000. This is the net result of 
a session which has cost the country in direct expenses 
some two millions of dollars. A nation which promises 
to pay a dollar, and then tries whether it cannot dis¬ 
charge the promise without paying the dollar, is beyond 
the help of Congress or of inconvertible bonds. Un¬ 
til we realize this truth we may long listen to Senatori¬ 
al debates, but they wili not save us from the conse¬ 
quences of our own dishonesty. 

[From the Pittsburg (Pa.) Commercial.] 

The country we think, is with the President in in¬ 
sisting that the government shall keep its solemn prom¬ 
ise to redeem the greenbacks in gold or its equivalent. 
There is no honorable escape from that pledge. It 
wa s given to sustain our national credit, at home and 


abroad, and cannot honestly be overlooked and neglect¬ 
ed. This policy, of course, looks to an ultimate ab¬ 
sorption of the greenback currency. 

[From the Cleveland (O.) Leader.] 

Whatever inflation Congress authorizes, whether it 
be to legalize the $26,000,000 of reserves now illegally is¬ 
sued, or to increase the legal tender limit to four hun¬ 
dred millions, will be only a measure to be reversed, a 
step to be retraced if the country is ever to redeem its 
already dishonored paper, or else it is a new arid im¬ 
portant milestone on the road to disgraceful repudia¬ 
tion. It is not the mere fact of adding $18,000,000 of 
legal tenders to the existing currency that means so 
much, but the abandonment of principle, the cowardly 
yielding to a reckless demand ior more irredeemable 
paper, that would be so fatally significant. 

[From the Troy (N. Y.) Tribune.] 

It is quite clear now that Congress will do its level 
best to inflict upon us inflation in some form, and, un¬ 
less dissensions arise among the advocates of that policy 
in regard to the particular form of financial balooning to 
be indulged in, a measure of that character will certainly 
be perfected before the close of the session. In that 
event the conservative business interests of the nation 
will look to the President for protection. There never 
was an instance in which the veto power had a better 
justification than it will have in this. 

[From the Buffalo (N. Y.) Express.] 

An examination of the vote on the currency bill 
shows that all the Representatives, in both parties, who 
have a general character for both ability and integrity, 
voted without exception with the minority against in¬ 
flation. The only members having a national reputa¬ 
tion who went for inflation were Benjamin F. Butler 
and Fernando Wood. 

Speech of Edward Atkinson. 

AT THE COOPER INSTITUTE, NEW YORK, MARCH 24, 1874. 

[Abridged from the full report.] 

The Government itself is to-day the great example 
of dishonesty and of useless and vicious insolvency; 
hence it is no wonder that its agents, its spies, its infor¬ 
mers, attempt to cast obloquy upon those except for 
whom the utter anarchy of mutual distrust would prevail. 
Were not the merchants,thq traders,the people,far better 
and more honest then the laws their rulers have made 
for them, the nation itself would cease to exist. At the 
door of those misguided or depr ived legislators who 
have enacted base statutes, lies the responsibility of 
most of the real frauds that exist, as well as of the dis¬ 
grace of false charges made against honest men. The 
employment by Government of spies in the administra¬ 
tion of its affairs, is always an evidence of weakness and 
the degree of their employment always measures that 
of its imbecility and rottenness. What we demand of 
legislators is that they shall apply the same simple rule 
of equity to the transactions of the nation that we ap¬ 
ply to our doings with each other. It needs only the 
plain, ordinary, and true course that an honest and up¬ 
right merchant would take,—that he could not help 
taking,—to rescue this country from the oppressions 
and dangers that are upon us. 

In the dark time of civil war, when the fate of the na¬ 
tion was at stake, many acts were done for which, in 
time of peace, there could be no justification ; among 
them was the legal tender act whereby the government 
levied a forced loan. The danger of this step was well 
understood by those who gave it a reluctant vote. Not 
until Mr. Chase had himself gone down to the Senate 
chamber and had said that without it he could not 
carry on the government, did our lamented Sumner 
and others of his associates yield their consent. Why 
did they hesitate 1 It was because these men who 
then urged heavier taxation rather than a resource to a 
forced loan, knew that no nation had ever yet redeemed 
the promises issued as money under the stress of war. 
Every nation, without exception, that has ever issued 
debt, to serve as money, has repudiated it, and has re¬ 
turned to specie payment through national bankruptcy. 
Yet, knowing that kingdoms and empires had thus 
failed, that every other nation that had ever issued 
promises in the place of dollars, or of other coined mon¬ 
ey, had failed to redeem them; knowing the dangers, 
they yet trusted a free people, and believed that we 
should prove an exception, and that in this, as in other 
ways, we should become an example and a leader 
among nations. Shall we prove false to this high faith ? 
Are we to disgrace ourselves and them ? Are we to dis¬ 
honor the dead 7 Shall the act which Lincoln signed 
to save the nation, prove its ruin? Never! The ig¬ 
norant, the depraved, and the incompetent men who 
have failed in these past years to dedicate the abundant 
revenues that the people have poured so lavishly into 
their hands to the honest, prompt, and true payment of 
the demand debt represented by the greenbacks,'have 
disgraced and dishonored the great men by whose acts 
the nation was saved and have converted this legal 
tender promise into a lie and a cheat. 


By its continued and enforced use they pick the pockets 
of the people and steal from the laborer a portion of the fruit 
of his labor, making him no return. Some have undertaken 
to rebuke those who call the greenback a lie, and have 
tried to hold them up to public scorn, because they say 
we cast obloquy upon one of the great war instru¬ 
ments by which the nation was saved. We honor the 
sword and the rifle which our soldiers used, when laid 
away as trophies, but if they had been placed in the 
hands of highwaymen when their righteous work had 
ended, and had been used by them to rob us on the 
road, should we still cherish and value the weapons 
even of our honored dead ? These men who have put 
back into use the greenbacks that had been paid and 
withdrawn, have done an act as base—they have con¬ 
verted the righteous weapons of the war into the im¬ 
plements of robbery and oppression. I charge not bad 
motives upon many men, but ignorance and weakness 
are more dangerous than wrong intent. When even 
an honest but hopelessly incapable Secretary of the 
Treasury seems to be only the dice box with which 
your Butlers, Sanborns, and Jaynes throw loaded dice 
in the gambling game to which a false and dishonored 
currency and a bad revenue system have brought all 
our commerce, it is time indeed to hold meetings of 
the people,to tell Congress—Take no action unless you 
take right action, condone no fraud, tolerate no tamper¬ 
ing with the currency. Tell Congress, at least to re¬ 
enact the limit of the currency, and take from the 
Secretary of the Treasury the power to play fast and 
loose with the great exchanges of the country, measured 
as they are in thousands of millions. Take away this 
unlawful assumption, which puts it in the power even 
of a subordinate of the Treasury to make or mar the 
fortunes of thousands. 

The heart of this people is true and honest—it beats 
for right and honor. As the people slowly but surely 
learned that “freedom was national and slavery sec¬ 
tional,” so will they as surely find out that a dishonored 
promise is bad money, and they will hold those legislators 
to a stern account who have failed in their duty in this 
emergency because they dared not trust and wait, firm 
in the conviction that truth is mightier than falsehood. 

We need not perplex ourselves with elaborate plans 
and cunning devices; an honest purpose and a fixed 
determination will be sure guides. Make the green¬ 
back of to-day only the same as the one first issued— 
not even quite as valuable because our credit is better; 
make it truly the same implement of war that first sav¬ 
ed the nation, if any legal tender note did that; make 
it convertible as the greenbacks when first issued were 
—at the will of the holder—not into a six but only into 
a five per cent bond, and then fix the date in the not 
distant future when it shall cease to be a legal tender; 
—then you will have kept the promised pledge; then 
an abundant current of gold and silver will pour in upon 
you, because here will be the most profitable place 
for its use; then those who do not fund their notes 
can be paid in coin on demand, for the five per cent 
bonds of the nation—even now at par in gold—wili 
command a large premium on every exchange on Eu¬ 
rope ; then the monopoly of banking may be remov¬ 
ed; resumption will take care of itself, and the wheels 
of commerce and profitable industry will not only 
move, but whirl once more. 

The whole secret of finance, the simple mystery is 
this: Let the nation keep its promise as it has the 
ability, and be true to the dead and the living. 

Since I had written the substance of what has gone 
before, the vote of the House of Representatives has 
passed, by which we shall become a laughing stock, or 
worse, among the nations—equally with England and 
Germany, who have sense enough to know that public 
integrity and public interest are inseparable, as with 
Austria, Italy and France, nations now struggling to 
throw off the burthen of a false standard of value. This 
vote, which indicates only ignorance inmost, weakness 
in others, but absolute wrong intent in many of those 
who passed it, may not be disastrous. We must organ¬ 
ize the forces of truth and righteousness; we must 
rouse the moral sense of the nation, which never yet 
failed to respond, even to the voices of the few and "the 
feeble who had God’s truth and justice behind them; 
and as sure as the nation continues to exist, will it learn 
what is needed and do it, cost what it may and hurt 
whom it may. In the name of truth, in the name of 
right, even in the name of common self-interest, let us 
keep up our courage, and here and now begin to organ¬ 
ize that force which ought to, and soon will, include ev¬ 
er/ honest man in the nation, and smite, hip and thigh, 
each one, high or low, who dares continue to enforce a 
lie as the only standard of value in this great nation. 


The Financial Record is published by the Finance De¬ 
partment of the American Social Science Association, at 
their offices. in New York and Boston. All communications 
respecting it may be addressed to the Secretary of the Asso¬ 
ciation, F. B. Sanborn, No. 5 Pemberton Square, (Room 21,, 
Boston; and all exchange papers, public documents, etc., may 
be forwarded to the same address. 















^nurkm Serial Sticirce ^ssociatioir. 

5 Pjemberton Square, (Room 21.) 

Boston, April 1, 1874. 

The Executive Committee of thi9 Association, in announcing the Programme for its General Meeting in 1874, takes this occasion to explain 
briefly the origin of the Association, its aim and method of working. It was established eight years ago, having been organized in Boston at a pub¬ 
lic meeting October 4, 1865, at which the late Gov. Andrew of Massachusetts presided, and has had for its Presidents, Prof. W. B. Rogers and Dr. 
Samuel Eliot of Boston, and George William Curtis of New York. Its members have varied in number from 150 to 600, and are now about 
200. Its object is to investigate and discuss all questions belonging to that new and broad domain of thought and practical activity known as Social 
Science: and its methods are, the holding of public meetings, the formation of committees for special research, correspondence with all parts of the 
country, and the publication of information in various ways. It comprises five Departments, in either of which its members may enroll themselves, 
but which are managed by Committees appointed by the General Committee, which, in turn, is elected annually by the whole body of members. 

The publishers for the Association are Messrs. Hurd & Houghton, 8 Astor Place, N. Y., who will furnish all documents of which the supply i 9 
not exhausted. Nos. 1, 3 and 4 of the Journal, can no longer be supplied. Members are entitled to all the publications of the year for which their 
assessment of five dollars is paid. The office of the Association is in Boston, and its annual meetings are held there, but its General Meetings are 
held in other cities. The present officers of the Association are the following,—the most distinguished among them, and one of the most active of 
our members, Prof. Agassiz, having died since the annual meeting in October,— 

President, GEORGE WILLIAM CURTIS, New York, 

Vice-Presidents : Samuel Eliot, Boston; H. C. Lea, Philadelphia; Theodore D. Woolsey, New Haven; J. W. Hoyt, Madison , [Vis,; George 
Davidson, San Francisco; D. C. Gilman, Oakland, Cal.; William T. Harris, St. Louis, Mo.; D. A. Wells, Norwich, Conn. 

Secretary, F. B. SANBORN, 6 Pemberton Square, Boston, Mass. 

Treasurer, J. S. BLATCHFORD, 13 Exchange Street, Boston, Mass. 

Directors: * Prof. Louis Agassiz, Emory Washburn, Charles W. Eliot, Prof. Benjamin Peirce, Cambridge; S. G. Howe, T. C. Amory, C. C. 
Perkins, J. M. Barnard, R. M. Mason, S. A. Green, Roger Wolcott, Boston; Edward C. Guild, Waltham; E. C. Wines. New York; Charles I. Walker, 
Detroit, Mich.; Mrs. John E Lodge, Mrs. S. Parkman, Mrs. Caroline H. Dali, Mrs. Henry Whitman, Miss A. W. May, Mis3 Alice S. Hooper, Boston, 

The above-named persons with the Chairmen of the Five Departments, make up a Council or Executive Committee of 35 members which 
meet* in Boston, on the last Saturday of every month. The Department Committees are a9 follows: 

DEPARTMENT OF EDUCATION. 

C. W. Eliot, LLD., President of Harvard College, Chairman; Miss A. W. May of Boston, Secretary. Prof. Benjamin Peirce, Prof. Child, Prof. 
J. M. Peirce, Cambridge; John D. Pnilbrick, Charles C. Perkins, Mrs S. Parkman, Ephraim Hunt, James M. Barnard, Justin Winsor, Joseph White, 
Boston; Prof. Runkle, Prof. W. P. Atkinson and Prof. G H. Ilowison, of the Institute of Technology, Boston; J. Elliot Cabot, Brookline, Mass.; W. C. 
Collar, Boxbury, Mass.; D. B. Hagar, Salem, Mass.; Mis9 A. E. Johnson, Framingham, Mass.; Elbridge Smith, Harrison Square, Mass.; Prof. C. O. 
Thompson, Worcester, Mass.; H. F. Harrington, New Bedford, Mass.; A. G. Boy den, Bridgewater, Mass. 

DEPARTMENT OF HEALTH. 

Edward Wigglesworth, Jr., M. D., Boston, Chairman; D. F. Lincoln, M. D Boston, Secretary. James M. Barnard, J. S. Blatchford, C. J. Blake 
M. D., Edward Cowles, M. D., Norton Folsom. M. D., T. Sterry Hunt, LL.D., B. H. Fitz, M. D., W. W ; Moreland, M. D., O. F. Wadsworth, M. D. 
Arthur H. Nichols, M. D., Joseph Willard, H. I. Bowditch, M. D., Prof. G. F. H. Markoe, T. W. Fisher, M. D., J. J. Putnam, M. D., Boston. ’ 

DEPARTMENT OF FINANCE. 

D. A. Wells, Norwich, Ct., Chairman; John M. Forbes, Boston; Gamaliel Bradford, Boston; George Walker, New York. 

DEPARTMENT OF JURISPRUDENCE. 

Hon. John Wells, Boston, Chairman; J. B. Thayer, Boston, Secretary. Emory Washburn, LL.D., Prof. Torrey, LL.D., Cambridge Mass • F V 
Balch, George Putnam, Jr., Moorfield Storey, D. E Ware, O. W. Holmes, Jr., W. A. Field, Boston. 

DEPARTMENT OF SOCIAL ECONOMY. 

Prof. W. B. Rogers, Chairman; Dr. S. G. Howe, Mrs. S. Parkman, Mrs. Henry Whitman, John Ayres, Esq., Miss Lucy Ellis Geor™ 
S. Hale. Esq , Boston; Charles F. Coffin, Esq., Richmond, Ind.; Dr. Robert T. Davis, Fall River, Mass.; Charles L. Brace, Esq. New York • F B 
Sanborn, Concord, Mass., Secretary. ' ’ 

The past year has not been one of extraordinary activity on the part of our Association ; but neither have we been idle. The papers read at 
our last general meeting in May, and the publication of the fifth number of the Journal of Social Science, containing most of these papers, along with 
much oilier matter, will bear witness to this statement; but in fact much more was done during the year than this alone would imply. Our acting 
Secretary, Mr. James M. Barnard (who was succeeded on the 8th of October by the present Secretary, Mr. F. B. Sanborn), in his report made to the 
annual meeting in October, mentioned some ot the work carried on under his direction, and through his zealous efforts. The Boston office of the As- 

•Dled December 14, 1873. 



FINANCIAL RECORD. 

“ WE NEED ONE THING BESIDES MORE MONEY, AND THAT IS BETTER MONEY .”—Senator Zach. Chandler. 


VOL. I. • FRIDAY, APRIL 10, 1874. 


The Financial Record will be published weekly three 
months, and may be continued beyond that period. It will 
be sent free of postage, to all persons who will remit 60 cents 
to the publishers at No. 6 Pemberton Square, Boston. All ed¬ 
itors who may receive it are invited to send their papers in 
exchange. 


A Word to Our Readers. 

Although Butlerism has been to-day signally defeat¬ 
ed, and the Senate inflation bill has not passed the 
House, we fear that ere long this bill or a worse one 
will be before the President for his approval. No 
more momentous responsibility ever rested on the 
President. The people of the country expect him to 
arrest the majority of the t wo Houses of Congress 
in their mad career. Every consideration of national 
honor and economy points in one direction. The 
President cannot be true to himself unless he inter¬ 
poses a prompt veto. We cannot believe that he will 
prove false to his repeated pledges, and violate the 
solemn promises of the government, by signing the in¬ 
flationists’ bill. 

But suppose he signs it! Then he ranges himself 
on the side of folly and repudiation, and from that 
moment party names and party ties will be forgotten. 
The hard money men have not entered into this con¬ 
test with the intention of yielding to a chance majori¬ 
ty. They mean to fight it out at the polls. They 
have the public promise on their side. Their policy is 
for the benefit of the whole people, rich and poor. All 
history and experience are in their favor; their ulti¬ 
mate success is certain. 

The contest has now fairly begun. Let every hon¬ 
est man who loves his country, and desires to see its 
promises kept, gird himself for the fight. It is not to 
be a short or an easy war. The inflation madness 
grows with indulgence. It is seductive and deceptive. 
The believers in honest money must be armed at every 
point. Above all, let no man be afraid of the cry that 
division on this subject will break up parties. Parties 
are useful only as they represent and uphold princi¬ 
ples. What party upholds a principle on this subject 1 
Why should a Republican follow Mr. Morton rather 
than Mr. Conkling ? Why should a Democrat accept 
the leadership of Mr. Merrimon rather than that of 
Mr. Thurman? Parties will be broken up by this 
question, nay, they have already been broken up. 
Air. Thurman touched on the truth when he said in the 
Senate last Monday: 

A great party is in power in every department of 
this government, executive, legislative, judicial; agreat 
question has arisen in the legislative body of this coun¬ 
try, in which that party has a majority of nearly three 
to one, and the result of four months’ deliberation on 
this question is, that the dominant party, in disregard 
of the recommendations of its Chief Magistrate, in dis¬ 
regard of the recommendations of its Secretary of the 
Treasury, in utter contempt of the recommendation of 
its experienced committee on finance, has agreed to 
adopt the measure of one of the minority of the body. 
Tiie great Republican party of the Senate of the United 
States has agreed to take the measure of a Democrat 
and place it upon the statute book of the country, in 
defiance of the recommendation of its President, in de¬ 
fiance of the recommmendation of its Secretary of the 
Treasury, and in utter scorn and contempt of the rec¬ 
ommendation of its committee on finance. 

Sir, I can take no credit for this triumph that my 
Democratic friend from North Carolina (Mr. Merrimon) 
has achieved. The Senator from Indiana (Mr. Morton), 
the Senator from Illinois (Mr. Logan), the Senator from 
Michigan (Mr. Ferry), were looked upon as that paper- 
money trinity which was to be exalted above all other 
gods in the country; but all their glories have gone 
and faded, and it was reserved for the pine woods of 
North Carolina to shape the financial destiny of this 
country. Disband your party, gentlemen ! I cannot 
say that that to which I belong is very solid. 


The Voice of New York. 

To degrade the currency, and at the same time to 
compel the people to receive it as equivalent to specie would be 
the most tyrannical exercise and abuse of the financial power 


of which civilized Government has ever been guilty in time of 
peace. It differs in no essential respect, either under 
its moral or practical effects, from a degradation of the 
standard of specie by an adulteration of the national 
coin.— Gov. Dix's Message. 


The Spirit of Congress. 

The past week has been more important than any 
other since the war, in its effect on currency legislation. 
The Senate passed its inflation bill on Monday, and 
this bill is perhaps on the point of passing the House of 
Representatives; the only hope for honest money now 
rests with the President, who may interpose his veto. 
The matter came up early on Monday in the Senate, 
and for whatever cause it was plain the inflationists 
were anxious to end the debate; being unable to get 
all they wanted, they were willing to take what they 
could get. In a debate between Mr. Morton and Mr. 
Frelinghuysen, the latter pointed out that the Republi¬ 
cans in Congress had promised to pay first the non-in¬ 
terest bearing debt. Air. Morton asked ‘‘if he arraign¬ 
ed the administration for having paid off the public 
debt?” Air. Frelinghuysen replied, “that he arraign¬ 
ed those who have given a solemn pledge that they 
would make the United States notes convertible into 
coin for refusing to do it;” adding that it is always ex¬ 
pensive to fulfil obligations, but it will be more expen¬ 
sive to disown this one. 

Air. Conkling moved an amendment that the public 
debt shall not be increased by this bill. Air. Alerrimon 
said this was absurd; Mr. Sherman, that a similar 
clause was in every financial bill passed since the close 
of the war; but the amendment after debate was re¬ 
jected, 24 to 28; Air. Allison alone of the inflationists 
supporting it. Mr. Howe moved that 70 per cent in 
amount of the new banking circulation be withdrawn 
from the greenback issue ; lost 25 to 30. Air. Morrill 
(Vt.) moved that none of the increased greenback issue 
shall be held as available for any future appropriation ; 
lost, 22 to 30. Mr. Bayard moved to repeal the ten 
per cent tax on State bank circulation ; lost, 12 to 38. 
Air. Alerrimon’s substitute was then adopted, 29 to 24. 
Mr. Sherman offered the finance committee’s original 
bill with modifications; rejected, 23 to 28. Air. Schurz 
offered a humorous amendment, (ruled out of order,) 
providing that the currency shall be elastic in volume, 
but stable in value, that every citizen shall first be ful¬ 
ly supplied with money, and then “the Secretary of the 
Treasury shall forthwith resume specie payments 
without any shock to the business of the country.” 

Amendments were exhausted and the final vote was to 
be taken; and now were briefly uttered some of the 
most solemn warnings of the whole debate. Mr. Sauls- 
bury warned Air. Morton, the leader of the inflationists, 
of a day of reckoning. Air. Conkling said this was “in¬ 
flation, utter and hurtful. Without necessity, or even 
sore temptation to extenuate it, such a policy spurns 
the experience of all epochs, tramples on reason and 
right, and violates the pledged faith of the nation.” 
Mr. Stewart, closed by saying: “This day will be long 
remembered by the American people. This is the sad¬ 
dest vote I have ever known to be taken ; I have seen 
nothing that bore upon its face so much promise of 
evil.” Air. Anthony said: “We are going against all 
the lessons of history, against all the teachings of ex¬ 
perience, and against all the laws of political economy.” 
Air. Thurman said the vote about to be taken meant 
“that no man of my age shall ever again see in this 
country that kind of currency,which the framers of the 
Constitution intended should be the currency of the Un¬ 
ion ; .... it means that so long as I shall live, and, pos¬ 
sibly, long after I shall be laid in the grave, this people 
shall have nothing but an irredeemable paper currency, 
.... well described as the most effective invention the 
wit of man ever devised to fertilize the rich man’s field 


NO. 10. 


at the expense of the poor man’s brow. I will have 
nothing to do with it.” Mr. Bayard thanked God that no 
vote or influence of his had been given for the perpetra¬ 
tion of this great wrong. Mr. Stockton said the meas¬ 
ure itself was ail act of national bankruptcy, and of re¬ 
pudiation ; and that in all history there was no such 
example of national dishonor. Mr. Sargent said that 
from that day a new political division was made; and 
predicted that there were men of all parties, in all parts 
of the country, who would scorn to follow leaders that 
betray the pledges and principles of the party. Air. 
Schurz said he had no tears to shed over the death of 
the two parties, but he felt humiliated as an American 
citizen. The inflationists made little answer; Alr.AIorton 
intimating there would be hereafter a reply “to the most 
extraordinary speeches he ever heard in the Senate.” 
On the final vote the bill passed 29 to 24. There were 
seven pairs, Senator Boutwell among them. The ab¬ 
sentees not paired, were Alcorn, Buckingham, Dennis, 
Ferry, (Ct.) and Gilbert. All who voted did so ac¬ 
cording to the division printed in No. 4 of the Finan¬ 
cial Record. 

In the House on Saturday, Air. Kelley spoke against 
specie payments and in support of his convertible 
bond scheme. Some telling facts were brought out in 
reply by Air. Burchard (who showed that there had 
been an increase of currency since 1869, reiterated 
statements to the contrary notwithstanding,) and Air. 
Merriam. The latter made these points : (1) that while 
greenbacks stood at a premium in New York during 
the panic, national bank notes were at the same pre¬ 
mium in a still poorer form of currency, namely, 
clearing house certificates; and (2) that if the banks 
are now ready to take $150,000,000 of low currency 
bonds to replace non-interest be ring greenbacks, in 
time of a panic these bonds would ail be thrown back 
on the treasury, which could not redeem them, having 
used up the legal tenders in buying long bonds. Gen. 
Butler, in reply to a question why three per cent was 
not chosen instead of 3.65 per cent, claimed a patent 
for himself on the 3.65 proposition, with the astonish¬ 
ing statement that he had discovered, by “looking 
over all the investments of the world” that the average 
of government loans was a little rising three per cent. 
Having asserted that money was worth something as 
money only because of the government stamp, he was 
reminded that gold and silver are received and paid 
out by governments by weight, and not by count of the 
coins. He was also forced to admit that the purchas¬ 
ing power of the whole volume of currency is less 
than during the panic, so that inflation has helped no¬ 
body, while the government is poorer by $61,000,000 
than at the beginning of the pan ic 

The debate has continued every day since. Air. Cox 
showed that Wall Street would swallow up the whole 
increase in an advance of prices, and exhibited in de¬ 
tail how much the gold premium adds to the cost of 
imported articles. Mr. Townsend (Penn.) opposed the 
bill as proposing unlimited inflation, as contrary to the 
Constitution and as postponing the day of specie pay¬ 
ments indefinitely. Air. Beck, (Ky.) who is understood 
to be privately opposed to inflation, spoke in favor of 
his propositions to make greenbacks receivable for cus¬ 
toms,and to tax Government bonds. Thursday and Fri¬ 
day were days of much excitement. Speeches against 
inflation were made by Alessrs. E. R. Hoar, Garfield, 
Tremaine, Randall and E. H. Roberts, and in favor of 
thatpolicyby Alessrs. Conger and Kasson. Air. May¬ 
nard called for the previous question, on his bill; was op¬ 
posed by Gen. Butler, who wished to substitute the Sen¬ 
ate bill, and was defeated, 77 to 124. This gave Gen. 
Butler charge of the bill, and he moved to postpone it 
until Tuesday so as at once to take from the table the 
Senate bill. Amid great excitement the postponement 
was carried by 133 to 121. But nothing more was 
done till Friday the 10th, when by the casting vote of 
































24 


THE FINANCIAL RECORD. 


Speaker Blaine the pos'ponement was defeated. So 
ti e House bill, and not that of the Senate is now be¬ 
fore the House. 

Old Words Come True. 

One of our contributors has lately reprinted an old 
squib of lii-t written in 1862, when Uncle Sam was think 
ing of debasing the currency, or, in other words, mak¬ 
ing a forced loan to carry on the war. Is not the pres¬ 
ent condition very similar, except that instead of debas¬ 
ing our currency for the supposed good of the whole 
country we are now going to do it for the supposed good 
of a very small part of the people ? for the speculators 
who make the most noise, and even the honest debtors 
ol the South and West, form a very small proportion 
of the voters, as Congressmen will discover when elec¬ 
tion comes round. 

But let us see how the change will affect the honest 
debtors now short of money. Nine out of ten of these 
wish to concentrate our money on their farms or their 
store goods, and think more currency will help them. 
Suppose it does ease them down on their first payments 
maturing and enable them to pay in a more depreciated 
currency, how will it be a little later? For some time 
gold has been going down, and capitalists in Europe 
have been sending their capital here to invest, and we 
at tiie Bast sending ours West. The first installments 
coming in we shall have to take in poorer money ; but 
with the prospects of still further depreciation, who is 
going to sen i any more capital from Europe here, or 
from here West, to lend on time? So the honest deb¬ 
tors, after getting their first wants eased by more cur¬ 
rency, will find all their future ones ten times more hard 
to satisfy. They will be in the same situation Uncle 
Sam was in 1862 Here is the comment then made 
by our contributor, who called it 

STANDARD WEIGHTS AND MEASURES. 

What is a coin but a standard by which to measure 
values, not absolutely invariable, but as near it as the 
nature of things will permit? It is now proposed tern 
poranly to abolish this standard in favor of another 
one, very much more variable in its nature. What is 
Uncle Sam to gain by changing this standard ? 

Let us suppose Uncle Sam owes now $100,000,000, 
which he has promised to pay in specie, and that he is 
liable to want $500,000,000 more. By changing the 
standard, he certainly gains $14,000,000 at the cost of 
his good name, but how is it to be with the next 100? 
Any man who offers to sell him anything hereafter, of 
course adds this 14 per cent to his price ! But is this 
all? By no means. The seller argues thus : The last 
time I trusted our uncle, he robbed me, or those who 
stand behind me, of 14 per cent; he has now establish¬ 
ed a new measure of value, which to-day differs 14 per 
cent from the old specie standard, and which he prom¬ 
ises to keep where it is by restricting the amount of his 
issue; but his measure is rendered elastic not merely 
by his power of emission, but by various other causes, 
which raise grave doubts whether, when the goods 
came to be paid for, the measure will be debased 14 or 
24 per cent. Prudent sellers then will add to their 
prices a good deal more than the 14 per cent to cover 
the risk. 

If speculators and gamblers, who have nothing to 
lose, bid lower, it will not help the matter. All who 
sell will in one way or another add considerably more 
than the 14 percent; the sellers will soon get out of 
Uncle Sam the full amount of the $14,000,000 he gained 
bv his first lapse from principle. But this is only part 
of the evil. In order to relieve himself from his fixed 
standard he relieves all the other debtors in the country 
from their obligations, and thus throw's the business of 
the whole community into confusion. The prudent and 
conservative are discouraged, and gamblers and specu¬ 
lators are invited to take charge of the great business 
operations of the country Notice is at the same time 
given to all prudent men to transfer their capital to 
some other community, and to prudent men. In short, 
the present scheme of changing the standard of money 
value by making paper a legal tender will make the 
same mischief, and be the same glaring injustice that 
it would be to enact that all goods should be measured 
by an India rubber tape held by the purchaser, or 
weighed after the old Sumatra custom, by having the 
buyer’s foot put into the scale at the number of pounds he 
chooses to estimate it. Economist. 

Boston, Jan. 27,1862. 


Timely History autl Sound Sense. 

Mr. Alexander Mitchell of Wisconsin, a practical 
banker and familiar with the history of finance, in a 
recent speech in Congress spoke as follows : 

THE FRENCH SHIN-PLASTERS. 

In 1790 the French government authorized the issue 
of $80,000,000 of assignats based on the security of the 


public domains, estimated to be worth $1 500,000,000; 
in September of the same year further issues to the 
amount of $160,000,000 were authorized. France was 
then a pctect paradise lor inflationists; the country 
was on the high road to prosperity; everybody was to 
have all the money he wanted. Talleyrand and a tew 
other leaders opposed those issues as certain to cause 
depreciation ; but Mirabeau and others ridiculed the 
idea <.f their becoming depreciated; for were they not 
based on land, and what more secure and solid as a 
foundation for currency could there be than land, and 
besides it was not possible to set afloat more than the 
business wants of the nation would absorb ? Said Mir- 
abeau: 

It is vain to assimilate assignats secured on the solid basis of 
these domains to an ordinary paper currency possessing afoiced 
circulation. They represent real properly, the most secure of 
all possessions the land on which we tread. Why is a metallic 
circulation solid? because it is based on subjects of real and 
durable value as is the land which is directly or indirectly the 
source Of all wealth. Paper money we are told will become 
superabundant; it will drive the metallic out of circulation. 
There cannot be a greater error than the terrors so generally 
prevalent as to the overissue of assignats. It is thus alone you 
will pay your debts, pay your troop -, advance the revolution. 
Reabsnrbpd progressively in the purchase of the national do¬ 
mains, this paper money can never become redundant any more 
than the humidity of the atmosphere can become cxce-sive 
which descends in rills, finds the river, and is a. length lost in 
the mighty ocean. 

We hear at the present time many speeches similar to 
Miraheau’s, and they appear very plausible, yet we all 
know how the stern events of the future demolishes the 
fine rhetoric of Mirabeau. Although these assignats 
bore 4 per cent, interest, they had in a twelvemonth 
lost one-third their value. On the 11th of April, 1793, 
the severest penalties were decreed against any one 
who bought or sold assignats for any sum in specie dif¬ 
ferent from their nominal value, or made any difference 
between a specie price and a paper price in the pur¬ 
chase or sale of goods. But it is folly to attempt by 
legislative enactments to overrule the great laws of 
trade. In four months the assignats had fallen to one- 
sixth of their nominal value ; and in 1796 they had 
fallen to one thousandth part of their nominal value, 
notwithstanding the fact that they were secured by the 
public lands. The ruin and misery caused by the issue 
of these assignats you all know. At length in July, 
1796. the great paper fabric was wiped out with one 
stroke. Immense hoards of specie came forth from 
their hiding-places; the exchanges turned in favor of 
France, and during all the Napoleonic wars the specie 
standard was maintained at its full value. 

THE AMERICAN ASSIGNATS. 

When once our currency becomes convertible into 
coin, that elasticity which is now so much sought after 
will also be attained. Whenever our currency becomes 
superabundant, then will it be cheaper to export gold 
than anything else, and the surplus coin leaving this 
country wiil compell the reduction of the currency to 
its normal proportions. On the other hand when our 
currency is too small in quantity, we draw coin from 
abroad. During the panic through which we have just 
passed coin was drawn from abroad even when it could 
not he used as currency. If it could have been so used, 
relief would have been more speedily obtained. 

Our currency, in its present depreciated state, proves 
a great draw-back to the farmer and all others the 
price of whose productions is governed by what is ex¬ 
ported to foreign markets. The farmer’s expenses are 
regulated under an inflated depreciated currency, while 
he sells his products in the markets o f the Old World 
where prices are regulated by a currency at par with 
specie. Our present inflated currency encourages spec¬ 
ulation and extravagance; increases the amount of 
credits; unduly stimulates importations, causing an 
adverse state of the exchanges and the exportation of 
coin ; and has a tendency to feed a panic as well as to 
render it very serious when it occurs. 

The currency of the United States was largest in 
1837 and 1857, and the result was an over-extension of 
credits and the inflation of the currency acting and re¬ 
acting on each other till a very widespread and serious 
financial crisis brought us back to a sound basis. It 
will require some self denial and real courage for our 
people to face a reduction of the currency; but it is 
much better to meet some small discomfort at present, 
than to rush on headlong to certain and very great loss 
at no remote future. 

THE BALANCE OF TRADE BUGBEAR. 

We are sometimes told that we cannot get our cur¬ 
rency back to an equality with coin till the balance of 
trade he in our favor, and by that is meant that the cus¬ 
tom-house reports must show an excess of exports over 
imports. One would suppose that this ghost called the 
balance of trade, which was such a terror to our fathers 
a century ago, had in these latter days of light been for¬ 
ever put down; but it seems to trouble many timid 
minds yet. If there be a nation in the world which 
may safely be said to have made money out of its for¬ 
eign trade and had a balance in its favor, that nation is 
England. Yet, taking the published statistics of her 
trade, the balance of trade doctrine would show that 
she had been losing money at a fearful rate by her com¬ 
merce ; and the wonder is that the nation was not bank¬ 


rupt long ago, or at least that her foreign trade was 
not long since abandoned as a losing business. I‘? r 
during the last five years the imports of Great Britain 
have exceeded her exports in the enormous sum ot 
£500.000.000, or nearly $2,500000.000, being more than 
j the amount of our entire national debt. I think this 
alone would show the absurdity of the balance of trade 
theory as it is usually applied, and he sufficient answer 
to those who assert that we cannot maintain currency 
at par with specie till our exports exceed our imports. 

Of the same character with the balance of trade hug- 
bear is that sometimes urged, to the effect that we can 
never return to a specie standard so long as we have so 
much interest to pay abroad. That objection is based on 
the exploded idea that we cannot pay our interest 
abroad in anything but specie, as if our wheat and 
corn, our cotton and petroleum, our pork and lumber, 
will not give us a credit balance in London just as 
readily as the gold of California. We may rest assured 
that gold is exported only when the nation can spare it 
better than anything else. We are a gold producing 
country, and it is proper that we should export the pro¬ 
ductions of our gold mines, as well as the productions 
of our iron mines or petroleum wells. Moreover, gold 
is more likely to be drawn from us now than when it 
is used as currency, or the basis of our currency. 

Spirit of the Press. 

[From theN. Y. Herald.] 

Inflationists should not fall into the error of suppos¬ 
ing that the apparent tranquility of the country in view 
of the oppression, robbery and wrong of the laws they 
are making in Congress, is due to want of perception 
or indifference. It is due to the nature of the people. 
Things are taken coolly with us until the moment for 
resistance comes. This fact has misled some close ob¬ 
servers of our character as a people. Inflation means 
national dishonor. It is not the first step towards that 
ignominious goal, for the first step was taken long since 
in the radical errors of our financial system ; but it is 
the first step that may he universally recognized as 
taken at a great turning point, as leading us on a path 
that can come out at no other place. It is the first of 
the steps which once definitely taken will be found to 
be irretraceable. 

[From the Baltimore American.] 

The dangerous and anomalous condition of affairs 
that constitutes the Secretary of the Treasury a sort of 
financial Jupiter, with sovereign powers over the trade 
and commerce of the nation, has no possible excuse, 
and should be ended forthwith. Secretary Richardson 
has followed the precedent set by Mr. Boutwell, and 
treated the cancelled notes of the Government as a 
“reserve ” In other words, he assumes the power to 
issue and withdraw, at his discretion, currency to the 
amount of forty-four millions—the power to depreciate 
the value of the Government paper, to increase the 
amount of the national debt, to alier values At discre¬ 
tion, adding extraordinary risks and dangers to business 
beyond the ordinary hazards of mercantile enterprise, 
and against which no sagacity can afford protection— 
the power to reduce the value of the workingman's 
wages, while with provident care he may resist, temp¬ 
tation to extravagance, and vainly endeavor by econ¬ 
omy to preserve the fruits of his labor—the power to 
go into Wall Street and insure the success of any spec¬ 
ulation in which he might engage, and if hold enough 
and bad enough, to prostrate the industry of tlie na¬ 
tion, and inflict ruin, want and suffering upon thousands 
of innocent people. 

[From the N. Y. Bulletin.] 

In truth, money is so abundant for Use time that the 
persistent cry in certain quarters for more currency 
sounds preposterous. The abundance, it need not he 
added, is not an indication of a healthful condition of 
the business interests of the country. It tells of a 
wide-spread stagnation, curtailment of mercantile oper¬ 
ations, suspension of enterprise, uncertainty in the 
present, and hesitation as to the future. And all this, 
too, when the ordinary conditions of a more healthful 
state of things were rarely more promising. It is un¬ 
necessary to dwell on the causes which have led to 
this dead lock. They are familiar to all who have 
watched from day to day the neglect, of Congress to 
definitely fix the limit of the legal tender currency. 

[From the Milwaukee Wisconsin.] 

It is a curious feature in the history of all paper 
money that no government ever yet redeemed its issues 
in coin. It could not weil do that unless the govern¬ 
ment became a regular bank, receiving deposits, and 
the notes of private individuals in lieu of its own paper. 
This is the reason why we tenaciously hold that specie 
payment never can be resumed in the United States 
until the government withdraws its legal tender.paper ; 
ami until it is redeemed daily or in coin, nothing less 
than the power of Jehovah could keep it at par. 

[From the Savannah Sunday Herald.] 

Some of the Southern members take the position 
that their States, “being poor and destitute,” should 
have more money, overlooking the fact that it is capi¬ 
tal, not currency, which is needed ; that we cannot 
have until we earn it, or import emigrants who have 
it. If there is a further issue of currency, in what 
































THE FINANCIAL RECORD. 


25 


manner can it benefit the South ? What have we to 
give in exchange for it ? There is plenty of money to 
pay for all that we raise now ; in fact, we need but lit¬ 
tle money, for it takes much of our crops, such as they 
are at present, to pay the North for the corn, oats, hay, 
dress goods, household furniture, jewelry, etc., etc., 
through the long, long list of Northern productions 
and manufactures which we will not raise or manufac¬ 
ture for ourselves, and upon which it is our fashion to 
waste our substance. We have no bonds (for which 
this money would have to be paid out), or few at least. 
What, then, have we to offer for a greater supply of 
1 currency ! Our land? Who wants it, no matter how 
fertile, how cheap, or where situated ? If the govern¬ 
ment had the authority to issue, and should issue, five 
hundred millions of treasury notes to-morrow, none of 
it would come to Georgia by virtue of the emission; 
no part of it could be obtained except by changing 
produce or other values for it; and if any one has 
money’s worth he can exchange for it money, now, 
without waiting for new issues of paper. 

[From the Philadelphia Ledger.] 

The only hope of a check to the wildest propositions 
j for expansion is a veto by the President, a thing that 
the usually best informed as to White House move¬ 
ments think not all probable, though the extraordinary 
character of the measure proposed is just such as to in¬ 
vite and to fully warrant Executive interference. While 
it may be true that the President is dissatisfied with 
the action of Congress on the currency question, it can 
hardly be hoped, in the multiplicity of political and per¬ 
sonal considerations, that he will rise to the level of the 
occasion and interpose his veto to prevent its becoming 
a law. 

[From the Chicago Times.] 

As a weathercock, Mr. Morton has one fatal defect. 
He presents an oblique moral surface, and is, conse¬ 
quently, almost certain to mistake the direction of the 
popular breeze. He is much more likely than not to 
I front northwest when the wind is due north, under the 
impression that he is facing directly south. It was so 
in 1868, when he advocated Butler-Pendletonism. It 
was so to a less extent in 1869, when he favored an im¬ 
mediate step toward specie payments. It is now as 
much so as it was in 1868, as Mr. Morton will find out 
in due time. But though he will certainly find it out, 
he will just as certainly face in the wrong direction 
| again. 

[From the Detroit Free Press.] 

It is the sole redeeming feature of this inflation action 
on the part of Congress that it has so divided the Re¬ 
publican party. If the Mortons, Logans, Ferrys, But¬ 
lers and Fields are Republicans, financially speaking, 

n the Conklings, Hamlins and Hawlevs are not. 

[From the Illinois State Register.] 

If the Democratic party has consistently maintained 
any doctrine, it is that paper money could not consti¬ 
tutionally be made legal-tender, but it appears that our 
nominal Democratic Congressmen have deserted this 
principle. 

[From the Atlanta (Ga.) Herald.] 

We of the S.rnth never indulged in a greater delu¬ 
sion than that of remedying our financial condition by 
inflating the amount of paper money now in circula¬ 
tion. Many persons in the South and West believe 
that the more currency they can have issued, the easier 
it will be to conduct business and pay their debts, and 
therefore urge their representatives in Congress to 
propose and advocate measures which to thinking men 
of monetary experience appear absurd. 

[From the Louisville Courier-Journal ] 

There is no doubt that the strongest influence at 
work in Washington upon the currency question has 
proceeded from the railroads. This has been alto¬ 
gether secret. We have seen, we may say without ex¬ 
aggeration, furlongs of petitions in favor of currency 
inflation from* merchants, farmers and artisans—all 
classes of the people have been brought out on that 
side by the advocates of expansion; but the railroadg 
have been to all outside appearances indifferent spec* 
tators. The bulk of railroad property in the United 
States is largely unreal, and nothing but an inflated 
and unreal system of finance can float it profitably to 
those interested. Values must not only be “boosted,” 
but speculation must be inaugurated anew, and a fe¬ 
verish tide of travel and traffic must be impelled into 
activity at whatever future cost. The great inflation¬ 
ists, after all, are the great trunk railroads. 

[From the Albany Journal.] 

The inflationists of the Senate have found some 
backers in New York—about six hundred all told, who 
have signed a petition for more currency. Their rea¬ 
sons are more remarkable than their cause. They are 
“alarmed at the efforts of the money lenders” to stop 
the issue of more paper ! This holy horror at the 
“money lenders” is refreshing, considering the source 
from which it ccmes. On examining the list of peti¬ 
tioners the only names we recognize are those of “oper¬ 
ators” in Wall Street. We have no doubt they would 
like more paper—it would help the bulls amazingly ; 
but it is rather cool for them to talk about the “money 
lenders,” from whom they derive the fictitious capital 
of their operations. And it is equally impudent for 
them to ask the Senate to help them in their schemes 
of speculation. 


[From the Madison (Wis.) Democrat.] 

The mania for speculation (which is always the in¬ 
separable attendant of the artificial prosperity induced 
by the first issue of an irredeemable paper currency) 
has so demoralized the community that the debtor 
class now desire to evade payment of their maturing 
obligations. They reason that if more paper money be 
issued their debts being payable in “legal tender,” and of 
the farther issue tending to make these paper dollars 
less value, they can more easily pay their debts. 

[From the Aberdeen, (Miss.) Examiner.] 

We frequently hear “expansion of the currency” 
spoken of by our people as a panacea for all the evils 
they endure; but we must confess to an obtuseness 
that forces us to regard the proposition with disfavor. 
So far as the cotton region is concerned, it would 
prove a positive curse, for while it would not give us a 
dollar more for our cotton crop, it would add to the 
value of every article that our folly and improvidence 
forces us to buy. 

[From the Lansing (Mich.) Republican ] 

What the West needs is not more irredeemable pa¬ 
per, but a sounder currency, and this she can have 
when the Government redeems its solemn promises, 
and not before. The West has too many speculators 
who are crying for more currency, but who never can 
get enough to float all their schemes and lift them to 
solid wealth. When Michigan had fifty “wild-cat” 
banks, and Brest, Singapore, Sandstone, and other al¬ 
most unknown places sent out their $50,000 each of 
beautiful paper money, the speculators cried for more 
currency as loudly as they now do. The honest pro¬ 
ducing classes don’t want to be bitten and bled in that 
style again. 

[From the Rutland (Vt.) Herald.] 

The return to specie payment is probably the only 
method that ever will be adopted for curing the evils of 
changing values and fluctuating currency and that 
should, in our opinion, be the great object to be aimed 
at by those who are striving to solve this financial 
problem. 

A Warning' From Texas. 

BY D. A. WELLS. 

The April number of the Atlantic Monthly contains a 
most timely and interesting account of what happened 
in Texas, thirty or forty years ago, under the reign of 
a shinplaster dynasty, such as Senators’ Morton and 
Logan, and Congressmen Butler and Kelley, are now 
seeking to establish in the United States. We con¬ 
dense from its pages the more important facts narrat¬ 
ed. 

AN OLD BLUNDER REPEATED. 

There is one great, plain, practical fact in respect to 
irredeemable paper money, which in itself is a sufficient 
answer to all the arguments that may be advanced in 
its favor. And that is, that there cannot be one single 
instance referred to-in the history of any state, nation, 
or people, in which its adoption and use has not been 
wholly disastrous. The more conspicuous examples 
and illustrations which prove this assertion—namely, 
the John Law scheme of 1716-1720, the currency of the 
American colonies before the Revolution, the Continen- 
tinal money, the French assignats; and later and in this 
century, the paper money experience of Austria, Russia, 
Italy, Spain, Turkey, and the South American States 
—are all more or less familiar; hut there is another ex¬ 
ample, little known, and rarely if ever referred to, 
which, occurring within a comparatively recent period, 
and under conditions analogous to those which in the 
opinion of many render the United States an exception 
to all the rest of the world, is no less interesting and in¬ 
structive. We refer to the fiscal experience of the Re¬ 
public of Texas, which, during the brief period of its 
existence as an independent nation, committed on a 
small scale nearly' all the financial blunders, and tried 
nearly all the financial experiments, which the greater 
nations of Europe have before and since committed and 
tried on a large scale. 

From the very first the Texan Republicans do not 
appear to have ever allowed themselves to be embar¬ 
rassed by the idea of Old World bankers, political econ¬ 
omists, and doctrinaires that the circulating medium of 
a country should be based upon the precious metals. 
They were wiser than all that; and they had in their 
possession something more valuable than gold and sil¬ 
ver,—the element and source of all wealth,—namely, 
an almost unlimited quantity of cheap, fertile land. 
This was the true thing, in their opinion, to bank on, 
and bank on it they' did. The first bank, charted in 1835, 
was the “Commercial and Agricultural Bank” of 
Brazos. Its capital was not to exceed $1,000,000, de- 
vided into shares of $100 each. It was authorized to 
established branches anywhere and everywhere; re¬ 
ceive eight per cent per annum on loans not exceeding 
six months, and ten per cent on loans exceeding that 
time; and only the capital of the bank was to be re¬ 
sponsible for the notes it issued. But the subscribers 
were required “to adequately secure the value of their shares 
with real estate in the Republic.” In short, it was a most 
liberal charter, and the only thing any way illiberal 
about it was the single clause, “that as soon as $100,- 


000, at least, have entered the vaults of the bank, it 
may commence operations.” “Dollars,” however, at 
that time, in Texas, says our historian, “ meant just 
whatever the people meant to make it mean.” William 
Strong, of Pennsylvania, Associate Justice of the Su¬ 
preme Court of the United States, had not then taken 
his seat on the bench ; but the Texans in 1835 knew 
as well as Judge Strong did, when he gave the legal 
tender decision in 1871, that “ value was an ideal thing 
that “it is hardly correct to speak of a standard of value 
that “the gold and sili>er thing we call a dollar is, in no sense, 
a standard of a dollar in fact, that anything is a dollar 
which the law-making powers may imagine it to be, 
and that it is not at all necessary that their “imagin¬ 
ing” for one year should be the same as their “imagin¬ 
ing” for some other and subsequent year. And as the 
Bank of Agriculture and Commerce appears to have 
commenced operations, and as there is no evidence that 
the $100,000 was ever paid in, we are warranted in 
supposing that the “ideal” took in every respect the 
place of the real. 

THE TEXAS WAY8 AND MEANS. 

At the outset the new Republic had, apart from the 
pledge or sale of its lands, but few financial resources. 
A financial report made to their Povisional Government 
or Council in November, 1835, brought out the fact, 
that although an army was in the field, engaged in active 
operations, yet “our finances arising from the receipt of 
ues for lands, as will appear on file in Mr. Gail Bor¬ 
den’s report, which were in his hands, are $58.30. This 
money has been exhausted, and also an advance by the 
President of the Council of $36.” But the men who had 
undertaken to make of Texas a free and independent Re¬ 
public were, in respect to audacity, enterprise and self- 
reliance, typical emigrants from the great American 
nation, and having put their hands to the plow had no 
intention of stopping half-way in the furrow. To suc¬ 
ceed in their undertaking “ways and means” were in¬ 
dispensable ; “and finding,” says our author, “that oth¬ 
er nations in their periods of exigency had resorted to 
taxing, borrowing, begging, selling, robbing and cheat¬ 
ing, they determined to try all six,” and he might have 
added, they in all six succeeded. The first feasible 
and ready way of collecting a revenue through taxation, 
that suggested itself, was by duties on imports, and the 
Texan legislators accordingly took to the tariff after 
the most approved American fashion ; enacting a given 
rate of duties on the 12th of December, revising the 
same on the 15lh, and making a new tariff on the 27th. 
In the ten years that Texas existed as an independent 
Republic, it had no less than seven distinct tariffs. The 
chief reliance of the government was, however, upon 
loans, and commissioners were early appointed to bor¬ 
row one million of dollars at a rate not exceeding ten 
percent, on bonds running for not less than five or more 
than ten years ; the commissioners being authorized to 
pledge the public faith, the public land, the public rev¬ 
enues, and, in short, everything that Texas possessed 
in the way of security, for their paj'ment. 

Under the head of “cheating,” we may group the sever¬ 
al acts and proceedings of the Republic in respect to the 
manufacture and issue of paper money. The national 
treasury was first established, so far as the election of 
a Treasurer could establish it, in November, 1835. 
The formal establishment of a national treasury was 
one thing; the filling it with money was quite another 
and different thing. And as sufficient funds for defray¬ 
ing the expenses of the government and the army did 
not come from any of the expedients of taxation, loans, 
the establishment of companies with banking privileges, 
the sale of lands, begging, or seizing private property 
by land and sea, the Republic next undertook to pay 
its way by drawing drafts on itself. To give these 
drafts credit and circulation an act was passed, Decem¬ 
ber, 1836, “That it shall be the duty of the several col¬ 
lectors (of customs) to receive the orders of the audi¬ 
tor upon the treasury of the Republic when offered by 
importers in payment of duties at the time of importa¬ 
tion and in June following, it was enacted. “That 
properly audited drafts on the treasury of the Republic 
shall be received in payment of taxes imposed, except 
on billiard tables, retailers of liquors, and nine-pin al¬ 
leys, or games of that kind.” By these two acts, Tex¬ 
as gave her audited drafts a greater value than they 
would otherwise have possessed, and caused them to 
pass into hands that otherwise would not have re¬ 
ceived them. From first to last, the issue of these aud¬ 
ited drafts amounted to about eight mdlions of dollars 
($7,834,207.) They do not appear to have ever, to any 
extent, answered the purpose of currency; and the cir¬ 
cumstance that they were issued for odd numbers of 
dollars and cents, and when passed from hand to hand 
required a calculation, doubtless contributed to prevent 
such a result. They gradually depreciated in value, 
and in December, 1837, one year after the passage of 
the act authorizing their reception for custom dues, 
another act was passed, declaring that the State would 
no longer receive such drafts in payment of debts due 
to itself. 

The greatest and best stroke of financial policy on 
the part of the new Republic was, however, reserved to 
the last; and in November, 1837, when borrowing, beg¬ 
ging, selling land script, and isssuing audited drafts had 
been exhausted,as expedients for raising money,the gov- 














26 


THE EIHAHCIAL RECORD. 


«rntnent commence 1 the i*sue of treasury notes. These 
notes were in the form of bank notes, ami by law were 
required to be printed “in neat form." They were also 
for round or even sums, and mainly for small amounts, 
and specified on their face ‘ that they will be received in 
payment for lands and other public dues, or be r> deemed with 
any moneys in the treasury not otherwise, appropriated.” 

MONEY PLENTY AT FIRST. 

The first noticeable and most interesting fact con¬ 
nected with the history of these Texan treasury notes 
is, that although the credit of Texas at the time of their 
issue was so bad that a foreign loan could not be nego¬ 
tiated, and the audited drafts ou the treasury had so 
far depreciated as to have but a nominal value, and 
that of less than fifteen cents ou the dollar, yet the 
notes themselves, though practically unredeemable, 
were when first issued at par, or nearly par, with specie, 
and furthermore were kept so for months, or until their 
issue exceeded in amount half a million of dollars. 
Tiie explanation of this curious phenomenon is. that 
the people of Texas, at the time of the authorization of 
these treasury notes, had practically no circulating me¬ 
dium for effecting exchanges, or none that was really wor¬ 
thy of the name; and although a community can get 
along in its business without a currency, as it can with¬ 
out horses and carts, ships and steam-engines,—all 
alike instrumentalities for effecting the interchange of 
commodities,—there is no community that will dispense 
with any of these agencies if it can help it. With the 
outbreak of the revolution the gold and silver money 
soon disappeared. With the failure of the banks of 
the United States in 1S37, the notes of the banking in¬ 
stitutions of the southwestern States, which had come 
in like a flood, and had supplied to Texas the void oc¬ 
casioned by the disappearance ot its specie circulation, 
became worthless; while the issue of shin-piasters of 
fractional notes of persons and firms, although contin¬ 
ued, was by law forbidden. The want of some medium 
that should have one value, and would regulate prices 
and faciliate exchanges, was therefore much felt; and 
when the government gave the people the best medium 
they could, threw around it all the guarantees that it 
was in their power to supply, and issued no more of 
the “medium” than was necessary" to meet the specific 
want, the people in turn accorded to the medium a val¬ 
ue proportional to the work it performed, or the ne¬ 
cessity it supplied. The first issue of notes, in addi¬ 
tion to a pledge of government faith to receive them in 
payment of all public dues and to redeem them as soon 
as there was anything to redeem them with, carried 
also a promise of ten per cent interest; a rate easily cal¬ 
culated, and which offered an inducement for hoarding 
the notes, to such Texans as could afford it and had also 
faith in their ultimate payment. The whole revenue 
from customs was also devoted to sustaining the credit 
of these treasury notes. 

The Texans were, moreover, exceedingly wise in their 
day and generation in another matter. The original 
treasury notes, although intended to serve as currency, 
were nevertheless, from tiie fact that they carried ten 
per cent interest, in reality" a species of national “bond;” 
and being issued in round sums of small amounts, as 
low even as $1. they were taken up as investments, or 
speculated in by persons of very small means, who never 
regarded themselves in any sense as capitalists. Yerv 
considerable sums thus found their way into the United 
States and were permanently held there.and even the ne¬ 
groes of New Orleans were enabled to enjoy the luxury 
of speculating in foreign securities. It is also curious to 
recall that at the time of the formation of the syndicate 
in 1870.-1871, for the purpose of funding the national 
debt of the United States at a lower rate of interest 
than 6 per cent, this very same plan that worked so 
successfully in Texas in 1837 was brought forward and 
urged before the committees of Congress with great in¬ 
genuity and ability, by the then head of European 
banking firm of Bowles Brothers, as a condition prece¬ 
dent and essential to placing permanently a large 
amount of Federal securities among the masses in Eu¬ 
rope at a very low rate of interest. Texas treasury 
notes continued to be at par, or nearly at par, with 
specie, until their amount exceeded half a million 
of dollars. If we take the population of Texas at 
that time as about forty thousand, and suppose that 
one fifth of the entire issue of half a million was hoard¬ 
ed, or floated off into the United Stares, then the re¬ 
sult affords a very strking and curious confirmation of 
the theory held by many of the best informed bankers 
and economists, that an average of about ten dollars per 
x capita is the utmost limit of paper money that a cum- 
' munity can permanently float and at the same time 
keep on a level or par with specie. It is also a fact in 
regard to the Continental money, that, so long as its 
issue was not in excess of thirty millions, or at the rate 
of about ten dollars per capita, or up to January, 1778, 
its maximum depreciation was not more than 5 per cent. 

MORE PAPER-MILL MONEY. 

The $500,000 paper treasury dollars having now done 
good service, why should not the people of Texas have 
more of so good a thing ? They accordinglv. through 
their legislative agents and representatives, determined 
to have more; and in the spring of 1838 a lull bearing 
the familiar title of ‘‘An Act to define and limit the issue of 


Promissory notes,” was reported in the House of Repre¬ 
sentatives which authorized an additional issue of $150,- 
000. The Senate, however, increased the existing 
amount to one million, and as thus amended, the bill 
passed both houses by large majorities.. Sturdy and 
honest Sam Houston was then President, and when the 
bi'lcame up for his signature, he promptly vetoed it, 
and gave his reasons therefor, in a message, so full ot 
common-sense and sound principles that there is noth¬ 
ing which the people of the United States could to-day 
read with greater profit and instruction. Indeed, it 
would almost seem as if he had before him, at the time 
of writing, the present condition of the United States, 
rather than that of his own people. He says, “When 
the (treasury note) currency was projected, both the 
government and tiie country were without resources. 
National existence and freedom had been achieved, but 
the struggle had left us destitute and naked. There 
were no banks ! There was no money ! Our lands 
could not be sold, and the public credit was of doubt¬ 
ful character ! To avoid the absolute dissolution of the 
government, it became necessary to resort to some ex¬ 
pedient that might furnish temporary relief. This 
could only be effected by creating a currency that should 
command some degree of credit abroad. It was hoped 
and believed, that if a small issue of government paper 
was made, with specific means of redemption p anted 
out, which appeared to be ample and well guaranteed, 
and the government should evince a prudent and dis¬ 
creet judgment in its management, it. would command 
such ariicles in the. market of the United States as 
were indispensable to the country. The result has jus 
tified the expectation.” 

But he continues, and his words are as full of truth 
now as then, “ The government will never be able by all the 
issues it can make, to satisfy the demands of private specula¬ 
tion and interest. The vast issues of all the banks in the 
United States (reference being here made to the con¬ 
dition of things in 1836—1837.) in their most extended 
condition, failed to attain this object.” The objections 
of the Executive for the moment prevailed; but anoth¬ 
er bid was passed a week after, which allowed the 
President to increase the ainount of Treasury notes to 
one million, if in his judgment the interests of the 
country required it; and at the same time, it specific¬ 
ally appropriated $450,000 of such notes, or an amount 
nearly equal to the whole existing issue, to the pay¬ 
ment of army, navy, and civil indebtedness. The bar¬ 
riers against unlimited inflation were thus indirectly 
removed, and from this time there seems to have been 
no effectual effort against it. 

THE DOWN-HILL ROAD. 

As might have been expected, with the authorization 
of the new issues the notes began to depreciate; and 
the depreciation increased with each additional emis¬ 
sion. In all, paper money in the form of treasury 
notes to the nominal amount of $4,717,939 was issued. 
In January, 1839, these notes were worth no more than 
forty cents on the dollar ; in the spring of 1839 they were 
worth thirty-seven and a half cents ; in 1841, from 
twelve to fifteen cents; and in 1842 they fell to ten 
cents, to five, to four, to three, to two, and finally be¬ 
came utterly worthless. In the characteristic language 
of the times, it required, before the close of President 
Lamar s administration, “fifteen dollars in treasury 
notes to buy three glasses of brandy and water, without 
sugar.” To the treasury notes succeeded what were 
termed “exchequer bills; but they were comparatively 
lew in number, and never passed to any extent into 
circulation. “By this time,” says Mr. Gouge, “there 
was little circulating medium of any kind in Texas; 
but this was no great calamity, as the people had but 
little left to circulate. The evils this system did were 
immense, and such as for which, even were it so dis¬ 
posed, the government could afford no compensation 
to the sufferers. They no doubt, however, like others 
in similar circumstances attributed to the want of cir 
dilating medium the evils they suffered frcm want of 
circulating capital.” In all, from first to last, the amount 
of “promissory notes,” “audited drafts,” “exchequer 
bills," bonds, etc., issued by the Texan treasury, and 
serving to a greater or less extent as “circulating niedi 
um,” amounted to $13,318,145; or reckoning the pop¬ 
ulation at fifty thousand, more than two hundred and 
sixty-six dollars per capita. If paper issues could, 
therefore, have made a people rich, the Texans ought 
to have been the richest people in the universe. 

One other thing in connection with this subject ought 
especially to be mentioned in all honor to the Texan-’. 
In the midst of their poverty, and crushed almost to 
the earth with their burden of financial necessities, they 
never made their government paper a legal tender in 
the payment of private debts ; but every man was left 
at liberty to refuse or receive treasury notes at his op 
tion. The result was, that when “red-backs” were 
almost the exclusive circulating medium, specie was 
the standard of ultimate reference. If a man bought 
an article on credit, he gave a note promising to pav 
dollars in silver, or so many treasury notes, as should, 
when the note fell due, be worth an equivalent of the 
amount owed in silver. 

But another and no less curious part of this history 
yet remains to be told. The experiment of paper issues, 


not redeemable in specie on demand, to supply the 
office and function of money, or circulating medium, 
had been fully and fairly tried in Texas, and the people, 
one and all, were so entirely satisfied with their experi¬ 
ences, that they wanted no more for all time, like it. 
They accordingly did not content themselves with mere 
ordinary legislation ; but when the Convention came 
together, immediately after the consummation of the 
act of annexation to the United States, to form a State 
Constitution, the delegates, by one of their earliest acts, 
inserted in the Constitution the following section, which 
was afterwards ratified by the people : 

“In no case shall the Legislature have power to issue ‘treas¬ 
ury warrants,’ ‘treasury notes,’ or paper of any description 
intended to circulate as money.” 

Various subterfuges were afterwards resorted to, and 
by means of them paper-money, to a very limited ex¬ 
tent, found its way into circulation in Texas after its 
annexation to the United States. But as a rule, the 
community never again looked with favor upon any 
other currency than specie. 

EFFECTS OF PAPER-MILL MONEY. 

Mr. Wells brings out two other series of facts in 
connection with the history of the paper money of 
Texas, which from their parallelism with results ob¬ 
tained on a larger scale, but under similar circum¬ 
stances, in the United States and other countries, are 
especially worthy of notice. The first relates to the 
incentive given by paper money to national extrava¬ 
gance and increase of expenditures. The revolution 
broke out in 1835. From that time until the close of 
1838, the period covering the main military operations 
and the practical achievement of independence, the 
Republic of Texas incurred a debt ot less than two 
millions of dollars. This small amount was not due 
to the circumstance that the government had any ob¬ 
jection to running in debt; “but because few would 
trust, except such as could not well avoid so iloiug.” 
In 1838 Mirabeau B. Lamar was elected President, and 
held office for three years, or until December, 1841. 
The period of his administration was one of compara¬ 
tive peace, but it was also the era of paper money and 
profusion. Lamar in his three years’ term increased 
the national debt from less than two millions to up¬ 
wards of seven millions. The average annual ex¬ 
penses of his government were also §1,618,405. 

In 1841 General Houston took office as President for 
a second term. The paper money bubble had exploded, 
but Mexican hostilities, which in General Lamar’s ad¬ 
ministration only threatened, now actually broke out. 
b et in General Houston’s last administration not only 
was the national debt not increased, except by incre¬ 
ments of interest and by the bringing in of back ac¬ 
counts; but the average annual expenses of ttie re¬ 
public were reduced from §1 618,405 to $170,361. This 
experience under President Houston, from 1842 to 1844 
inclusive, shows that if it had been possible for the 
Texans to he hard money and prompt-payment men, 
they might have achieved their independence and de¬ 
frayed ail the expenses of the Republic, at a cost of two 
hundred thousand a year. But the Texans never be¬ 
came economical until constrained by necessity. So 
long as they could borrow, or induce any one to take 
their paper money, they were extravagant; hut when 
they could borrow no longer, and their paper money 
refused to circulate, then they became saving. 

Tbe second series of facts relates to the influence 
which an excess of paper currency in Texas exerted in 
encouraging imports and discouraging exports. Thus 
during the administration of Lamar- 1839—1840— 
when treasury notes were the circulating medium, and 
money was, as it is termed, “abundant,” the imports 
were nearly six times as great as the exports ; or an 
average of §1,442,733 of imports per annum as com¬ 
pared with an average of $247,459 of exports. On the 
contrary, in two years of Houston’s second term, 
1843—1814, when such notes were no longer current, 
the exports nearly equated the imports ; the average' 
annual import being $578,854 as compared with an av¬ 
erage annual export of $506,444. 

Whether the memory of the events and experiences 
thus recorded has been kept alive in Texas, we know 
not; but one thing is certain, that from the annexa¬ 
tion of Texas to the present day, her people have 
evinced no love for paper money. During the rebel¬ 
lion, Confederate money found little favor in Texas, 
and circulated only under the pressure of military law 
and necessity ; along the lines of the several railroads, 
fares and freights have been latterly paid in currency ; 
and since the opening of the Missouri, Kansas and 
Texas Railroad, currency has gradually entered to a 
greater or less extent into the transactions of mer¬ 
chants; but in the interior, cattle and cotton can be 
purchased only for specie, and with the average Texan, 
who travels with an ox-team or on mule back, the 
greenback obtains no recognition. 


The Financial Record is published by the Finance De¬ 
partment of the American So ial Science Association at 
their office^ in New York and Boston Alt com-mmication« 
respecting it may be addressed to the Secretary of the Asso¬ 
ciation, F. B. Sanborn. No. 5 Pemberton Square, (Room 21 
Boston ; and all exchange papers, public documents, etc., mav 
be forwarded to tbe same address. 
















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FINANCIAL RECORD 

“WE NEED ONE THING BESIDES MORE MONEY, AND THAT IS BETTER MONEY.”—Senator Zcich. Chandler. 


VOL. I. FRIDAY, APRIL 17, 1874. NO. 11. 


The Financial Record will be published weekly three 
months, and may be continued beyond that period ” It will 
be sent free of postage, to all persons who will remit 50 cents 
to the publishers at No. 5 Pemberton Square, Boston. All ed¬ 
itors who may receive it are invited to send their papers in 
exchange. 


The Senate Bill. 

The Senate Bill to increase the greenback issue and 
the national bank circulation has been passed by both 
Houses of Congress, and has been sent to the Presi¬ 
dent. The state of opinion as to the effects of this 
measure has undergone frequent changes. At first it 
was looked upon as a bill containing inflation only. 
Next, on the strength of some calculations of the Comp¬ 
troller of Currency, it has been believed that the clause 
relating to the retention of three-quarters of the bank 
reserves would work a large immediate contraction. 
Later and more accurate arithmetic seems to establish 
the fact that the real contraction will be a mere baga¬ 
telle, only a very few million dollars according to the 
latest bank statements. 

But this is a minor matter. The Senate bill author¬ 
izes an increase of the legal tender issues of the United 
States, which our government is bound in honor to pay, 
and which honor forbids us to increase by a single dol¬ 
lar. By this bill the irredeemable debt of the nation 
will be augmented. It may or may not be an incident 
of the bill that the debt will be held differently. That 
is, it may or may not be that in increasing a forced loan, 
we may compel the national banks to holdalarger share 
of that loan than they now hold. Bat the debt is increased, 
and it is against that increase that good faith and nation¬ 
al honor protest. It does not bring us towards specie 
payments, but leads us away from resumption. 

It is certain that the inflationists will not get from 
the bill the relief they have professed to expect. It 
is inevitable that they should lay the blame of the 
failure, not, as they ought, on their own false princi¬ 
ples but on the restrictive clauses of this bill. A new 
clamor will arise for further inflation, and if the history 
of other countries is to be repeated in the United 
States, the resistance will be less active and strong 
than it now is. The Senate bill is but a first step. 
It is confessed so to be by the members who urged its 
passage. As such it should be opposed by every advo¬ 
cate of honest money, and if the President should sign 
it a vigorous agitation tor its repeal should immediate¬ 
ly begin. 

The Spirit of Congress. 

During the past week concurrent action between the 
Senate and the House has been reached and wiiat is 
known as the Senate bill is before the President for his 
signature. 

On Saturday last the Maynard Bill came up in regu¬ 
lar order. After the House had refused to order the 
previous question, several amendments were proposed 
and voted on, but they were all rejected. One of these 
offered by Mr. Beck, was a mixture of various schemes : 
convertible bonds, withdrawal of all national bank cir¬ 
culation, large inflation of the greenback issue, partial 
payment of duties in legal tenders, etc. This amend¬ 
ment received but 68 votes. The several propositions 
having been voted upon, the bill was once more open 
to amendments, and four such were submitted : (1) by 

Gen. Butler to substitute the Senate bill for that of 
the House; (2) by Mr. Wilson, (Ind.,) to add to the Sen¬ 
ate bill clauses for free banking, repeal of laws requiring 
a reserve, etc.; (3) by Mr. Foster, (Ohio), that an amount 
equal to 25 per cent of the additional issue of national 
bank notes shall be withdrawn from the greenback circu¬ 
lation ; (4) by Mr. E. B. Hoar, that after the 1st of Sep¬ 
tember, 1874, only gold and silver shall be a legal ten¬ 
der, and thereafter greenbacks maybe funded in a ten- 
thirty year 4 1-2 per cent bond The previous question 
was then again moved, and the bill went over to Tues¬ 
day. 


On that day the amendments of Messrs. Butler and 
Wilson were withdrawn. That of Mr. Hoar was re¬ 
jected by 70 to 171; that of Mr. Foster by 105 to 133 ; 
and the bill was then passed by 128 to 116. Neither of 
these votes was a fair test of the feeling of the House on 
the subject of inflation; but the first, on Mr. Hoar’s 
amendment, was probably the nearest a test. On the 
question of passing the bill, Judge Kelley and several 
other inflationists voted in the negative. 

Immediately after the vote on the Maynard bill the 
House proceeded to the consideration of the Senate 
bill. Several points of order were made, to prevent im¬ 
mediate action, but they were all overruled, the previ 
ous question was ordered, and the bill was passed, with 
out a word of debate, by a vote of 140 to 102. The Sen¬ 
ate bill was therefore agreed to in concurrence, and only 
the President’s signature is necessary to make it a law. 

The two bills thus passed by the House in one day, 
are totally inconsistent with each other in many partic¬ 
ulars, but as there is hardly a chance that the Maynard 
bill will be favorably considered by the Senate, it 
would be a mere waste of space to compare the two 
measures. 


Calling' a Spade a Spade. 

The contractionist papers are using a great deal of 
eloquence and logic to prove that the country will be 
none the richer for the increase of the currency. In a 
technical sense that is true, l«ut in a broader sense it is 
not. If money is not wealth, it is the means of doing 
business and of making wealth. As well expect the 
country to prosper with a limited number ot spades, 
axes, or jack-planes, as with an inadequate supply of cur¬ 
rency, or the tools for doing business. — Indianapolis 
Journal. 

A good and perfectly fair argument! But what would 
be thought of a proposition to ship a hundred thousand 
spades to New York for Western and Southern use, 
when half a million spades were already in the New 
YArk market, and unavailable because the West and 
South would not or could not buy them ! 


Capital or Currency? 

Mr. Coburn of Indiana is the first member of Con¬ 
gress to dispute the proposition that the West and 
South need capital more than they need currency; 
and that they fail to obtain the latter, because they 
have not an excess of the former. In a speech last 
week he boldly denied this assertion. In doing so he 
misstated the argument of the hard money men, put¬ 
ting it in this way: “that we are destitute of capital 
and have no right to currency.” This, nobody asserts. 
The position assumed by those who oppose inflation is, 
that as compared to the East, the West and South are 
deficient in free capital and hence the East has and 
can keep more than its share of the currency. 

In proof of his position Mr. Coburn used the tables 
of valuation in the census report. We take the table 
used by him and add the last column, which shows the 
wealth per capita of the States which he selected as 
shown by the cencus : 


Valuation. 

Aggregate. Per Capiti 

Connecticut..$ 774,631,524 $1441.29 

Rhode Island. 296,965,646 1366.27 

Massachusetts. 2,132.148,741 1465.08 

Illinois. 2 131,680,579 835.34 

Indiana... 1,268,180,543 754.57 

Missouri. 1,284,922,897 746.48 

Iowa. 7l7.644.75iJ 601.12 

Michigan. 719,208,118 604.87 

Ohio. 2,235,430.300 838.65 

Wisconsin. 702,307,329 666.00 


Now this table proves what Senator Scliurz and 
others have contended for. The three States first nam¬ 
ed are nearly or quite twice as rich per capita as the 
others. More men have capital to invest, and they 
have more of it. The census might be made to prove 
much more. The two States of Indiana and Massachu 
setts are respectively sixth and seventh in the Union 
in the order of population. The value of agricultural 


and manufactured productions combined, less the ma¬ 
terials used in manufactures, was in 1870 upwards of 
$250,000,000 in Massachusetts, and only $168,000,000 
in the more populous State of Indiana. We have taken 
no account of the profits of trade and commerce, which 
were immensely larger in the Eastern than in the West¬ 
ern State, nor of the returns on investments by Eastern 
capitalists in the Western States. Leaving these aside, 
the profits per capita were seventy per cent greater in 
Massachusetts than in Indiana. A reasonable allow¬ 
ance must be made for the higher cost of living at the 
East, but there will still be a heavy per centage in 
favor of Massachusetts. 

It only remains to say that the free capital,—that 
which can be invested, deposited, speculated with, or 
traded upon,—is what remains after payment has been 
made for articles consumed. If Indiana as a whole 
produces to the value of five hundred millions ; and if 
Indianians as a whole consume goods worth the same 
sum ; the State is no richer, though individuals may be. 
In such a case all the mqney that goes into the State to 
pay for articles produced in Indiana, goes out in pay¬ 
ment for articles bought elsewhere. This is not an exact 
statement, of course. Indiana produces more than it con¬ 
sumes, but a smaller excess than Massachusetts. Con¬ 
sequently Massachusetts is too strong a competitor for 
money for Indiana to overcome; and except when the 
East needs Western productions more than it needs 
money, the money stays at the East. It is therefore the 
deficiency of capital that prevents the West from getting 
currency. 


No More Broken Promises. 

Judge E. R. Hoar was President Grant’s first Attor¬ 
ney-General, and it was of him that Grant said in 1869, 
“I have the best Attorney-General that I could have 
found in the country, and the best that any President 
ever had.” The Judge left the cabinet in 1870 and is 
now a member of Congress from Massachusetts. In a 
short speech against inflation, he said last week: 

Mr. Speaker, with provision for the redemption in 
specie of any currency issued, I have no objection to 
free banking. I have no objection to anything which 
will increase the circulation to any extent that it can 
be maintained in the country, and in any part of the 
country, provided it is to be an honest circulation that 
is worth what it professes to be; and I solemnly ask 
the house to pause. I have no time or inclination to 
discuss with any gentleman the question whether what¬ 
ever the government chooses to call money is money ; 
whether by putting a government stamp upon a piece 
of paper you can make it money. I believe that you 
might just as well say that you make a man an honest 
or sensible man by giving him a certificate that he is 
elected to Congress. I have very little to say to gen¬ 
tlemen who speak of the excellence and absolute supe¬ 
riority of a currency that is based upon the credit of 
this great Government, or of this great nation. All I 
have to say about that is that you do not give the credit of 
the Governinent to promises which the Government steadily re¬ 
fuses to take any measures to perform or keep. We have not 
any currency with the credit of the Government attached to it, 
unless the Government keeps its faith with its creditors. 

TIME AND MONET. 

I believe that you may just as well talk about mak¬ 
ing more time as of making money, unless you give it 
substantial value. We had the other daj- a misprint in 
a bill by which it was made to read the 32d January, 
and it was amended by making it the 31st. And it 
seems to me more time was very much needed by the 
people of this country ; that this House has hardly time 
to transact its business,and that Congress should be en¬ 
abled to add a few days to its year by legislation. And 
if Congress should do so, as when the new style was 
substituted for the old,there were some ten days dropped, 
I suppose the Secretary of the Treasury would bring 
forward those days, which he would be pleased to call 
his reserve, and add it to the number of days in the 
year. I believe that the people of my section of the 
country are willing and desirous that the people of every 
other section shall have all the facilities, all the bene¬ 
fits, which the legislation of the country can give them. 
What we want is to have money, to have money which 
has solid value ; and my protest is against issuing in 































THE FINANCIAL RECORD. 


28 


any form any species of paper promises in lieu of money 
till the government keeps its faith by making those 
promises equal to gold. The people of this country 
will not long sustain anything but the faithful perform¬ 
ance of public promises and the keeping of the pub¬ 
lic faith. 

THE PUBLIC FAITH PLEDGED. 

Mr. Speaker, the first act signed by the present occu¬ 
pant of the executive chair pledged the faith of this 
nation to the holders of its promises that measures 
should be taken for redeeming those promises in gold 
at the earliest practicable period. Both political par¬ 
ties have promised it again and again to the people who 
sent us as their representatives here. Every man on 
this floor knows that to add in any form to our curren¬ 
cy irredeemable paper, or paper for the redemption of 
which no provision lias been made, postpones and puts 
off the day of keeping that sacred pledge of the pub¬ 
lic faith. We on this side of the House and the people 
whom we represent have elected to the office of Presi¬ 
dent of the United States upon this basis the present 
incumbent. He has in every message that he has sent 
to Congress given in his full adhesion to those acts. 
Are you going to send him up a bill to sign, by signing 
which he is to abandon, renounce and break every 
pledge which his party and which the people of the 
country have required of him ? Are we going to break 
that pledge for ourselves? 

For myself, I will vote for no bill that adds one dol¬ 
lar more to the currency for any purpose that is not accompa¬ 
nied by such means taken for its redemption in specie as to 
bring us nearer to specie payments. We have no moral right 
to do it. It is a very questionable proposition, much 
discussed, whether we have a constitutional right to do 
it. It is a breach of good faith to do it. You may 
take away all banking facilities from New England and 
put them where you please, rather than do it with my 
consent. 

Spirit of the Press. 

[From the Montreal Herald.] 

From the moment that the present inflation bill pass¬ 
es, the finance of the Union will have entered upon a 
new and mischievous phase. Instead of inconvertible 
paper being regarded as an evil, which must be borne 
for a time,or as an expedient of an exceptional nature,it 
is to be created and augmented for its own sake as a 
recognized instrument of national prosperity. Wash¬ 
ington, Jefferson, Franklin, Lee, Madison, Adams, Ham¬ 
ilton and many others denounced it as the robbery of 
the poorer classes, and the destruction of the State. 
Their successors are not so wise, but unless they learn 
wisdom otherwise we fear they will be taught by very 
disagreeable experience. 

[From the N. Y. Evening Mail ] 

The vast majority of the people want a sound cur¬ 
rency. Inflation reduces the actual burdens of debtors, 
for awhile, but the debtors are in a decided minority. 
Laboring men cannot run into debt, to any extent 
worth speaking of. It is speculators and men who are 
doing business on borrowed capital, that constitute 
the active, unscrupulous, noisy and influential class, 
who are back of the pressure for inflation. The poor 
and the solvent middle class; the rich; all legitimate 
traders; the widows and orphans, who have fixed in¬ 
vestments—these are all, by right, on the side of a 
sound currency. They constitute five sixths, at least, 
of the population. They own nine-tentLs, at least, of 
the property of the country. 

[From the N. Y. Graphic.] 

No honest man should consent to call a piece of print¬ 
ed paper a dollar when it will buy but seventy-five 
cents in gold. Treat the base and demoralized thing 
as it deserves, and it will be driven out of circulation in 
the Eastern States, to the infinite gratification of those 
Southern and Western ignoramuses who clamor for 
more currency as though paper were money. This 
was what California did during the war, and was the 
gainer for doing. 

[From the New Haven (Ct.) Journal.] 

We doubt if six men in the Senate really believe that 
the indefinite and irredeemable issue of paper rags will 
permanently benefit the country. Possibly there are 
that many, just as it is likely enough that there are four 
or five unalloyed idiots in that body who honestly be¬ 
lieve that England and Germany are “effete monarch¬ 
ies” and that our “rolling prairies”are the noblest work 
of God. But we make bold to declare that the ma¬ 
jority of the inflationists acted from corrupt motives 
rather than mental imbecility. They wanted to “rep¬ 
resent their constituents,” “advance the interests of 
their locality,” “respect the will of the people;”—in 
other words, increase their local popularity so as to en¬ 
hance their chances of re-election or party promotion. 

[From the Sacramento (Cal.) Record.] 

Should the programme of the inflationists be carried 
into effect, it is perfectly safe to predict another panic 
within a year, and a more disastrous one than the last. 
In the meantime prices will go up, the farmer’s bushel 
of wheat will lose an additional percentage of purchas¬ 
ing power, speculation in Wall street will rise to fever 


heat, and profits of legitimate trade will deteriorate, 
manufactures will languish; and not improbably the 
same astute financiers who are engineering this inflation 
movement now, will propose, as a remedy for the evils 
inseparable from the success of their policy, further in¬ 
flation. 

[From the Concord (N. H.) Patriot.] 

If the old system of a United States Bank with for¬ 
ty millions of paper money was wrong, then are not 
three or four hundred National Banks with $400,000,- 
000 of paper money wrong now ? and does it not go to 
prove to every candid mind that the policy of the Re¬ 
publican party, which is nothing more or less than the 
■ old Federal party’s policy revived, is wrong, and has 
well-nigh brought ruin on the country and the people? 
Northern bankers and northern merchants who have 
combatted the Democratic theory of finance in the past 
have come down from their old position, to see the 
error of their ways. They are alarmed and nervous 
over the condition of affairs, and are crying aloud for 
help to stay the onward march of inflation which they 
see, as all can now see, will lead to ruin and to destruc¬ 
tion unless checked in time. 

[From the Chicago Western Rural.] 

The $26,000,000 “reserve” was opened during the 
panic, for the purpose of staving off bankruptcy from 
tottering banks and Wall street gamblers. The amount 
of the inflation is small, and were it not for the princi¬ 
ple established, and if the inflationists would respect the 
pledge that the currency shall not exceed $400,000,000, 
it would not be worth quarreling about. It will not 
satisfy the inflationists, who will soon be howling 
around for a further watering of our circulating medium. 
In fact, the producing classes will not be anything but 
shuttlecocks for the bankers until business is transacted 
on a gold basis. The subjects of railroad transporta¬ 
tion, protective tariff, grain-gambling, banking, and so 
on,are all inextricably bound up with the financial ques¬ 
tion. Upon the farmers’ understanding of this question 
when it is submitted to them to vote upon, as it must 
be, in some shape, depends the future of our country. 

[Harper’s Weekly.] 

The country is thus launched upon the era of infla¬ 
tion of the French assignats and Continental currency. 
The bill, indeed, professes to limit the total amount of 
notes to $400,000,000. But since the House has de¬ 
liberately violated the solemnly pledged faith of the 
country by turning away from resumption towards ex¬ 
pansion, that limitation is merely laughable. The rea¬ 
soning that demands inflation to-day, will demand more 
inflation to morrow. 

[St. Louis Globe.] 

Congress, in the exercise of a power which it does 
not possess, and listening to the clamor only of those 
who have argued themselves out of court by their own 
commissions,as the escape from the dilemma of its own 
ignorance, now proposes to depreciate the value of all 
property in the country for the sake of helping those 
who have no property; it fines frugality, industry, 
savings, capital and all accumulated wealth, all lands 
and tenements and goods, and unsettles the conditions 
of their ownership—and ail for the benefit of those who 
owe more than they are worth. 

[Burlington (la.) Hawk-Eye.] 

The country is waking up to the enormous dangers 
of a further inflation of the currency. In inaugurating 
this system Congress is guilty of one of the greatest 
blunders ever committed by a legislative body, and it 
is a disgrace to our country, and will be forever con¬ 
spicuous in our history as a folly so absolute and inex¬ 
cusable as to be little less than a great crime. 

[Fond du Lac (Wis.) Commonwealth.] 

If this bill becomes a law it will prove the most fatal 
act the Congress of the United States has ever commit¬ 
ted, and will be a death-blow to all existing political 
organizations. The vital issue will hereafter be this 
great question of finance; and as between the party 
that espouses the policy of a safe currency, and that 
which advocates a deluge of rags as a medium of ex¬ 
change, there cannot long be any uncertainty as to 
supremacy. The inflationists as a political organization 
must soon go to the wall. 

[N. Y. Commercial Advertiser.] 

Inflation is a disturbing and revolutionary element. 
It will impart no confidence to business men, and will 
give no new activity to industry. Speculation and waste 
may thrive, but the general business of the country 
will be unsettled, and the tone of public morals will be 
lowered. The debased currency will have a degraded 
public sense for its backing, and the people who use 
these currency “lies” will be ashamed of the necessity 
which forces their employment upon them. 

[From the Hartford Courant.] 

The comments of the German and French newspa¬ 
pers upon the finance debates in our Senate are very 
instructive. However much we have been supposed to 
lack in culture, in knowledge of art, it has always been 
believed that we were a “smart” people, and especially 
that we had cut our eye teeth in matters financial. 
The newspapers are therefore divided between amuse¬ 
ment and amazement over the ignorance of the simplest 


principles of finance displayed in the Senate debates. 
Their amazement is not greater then our own at the 
assurance of the Secretary of the Treasury in talking 
about his “reserve” of forty-four millions of legal ten¬ 
ders. If there was any such reserve where has it been 
all this time? It was not in his vaults. It was not in 
fact in existence anywhere. The proof of this is that 
it has not been included in any treasury statement. 

[From the Minneapolis Tribune.] 

The ultimate resumption of specie payments will now 
be pushed a day or two further off, and it is probable 
that in another year the issue of the $18,000,000 will be so 
totally absorbed in the slight rise of values which will 
take place to meet this slight increase of that financial 
proxy which we call money, that the inflationists will 
be once more petitioning for relief. 

[From the Philadelphia Chronicle.] 

The House (in the midst of a scene of wild disorder 
and confusion that ill- befitted the work in which it was 
engaged, and that only indicated, we fear, the condition 
in which the business of the country is likely to remain 
until a new Congress with more brains and principles 
than this shall take the first step towards a substantial % 
restoration), has passed the bill fixing the legal tender 
circulation at $400,000,000. It is something gained 
that we know the length of the yardstick, even for a 
time; it is to be about one-eighth longer than it has been, 
and it is not left to the secretary to vary its length at 
will. 

[From the Bangor (Me.) Whig.] 

The Senate bill is simply outrageous in its. character ; 
a direct repudiation of the pledges heretofore given that 
the national policy should tend to the earliest practica¬ 
ble return to specie payments ; and a bold announce¬ 
ment that a majority of the Senate hold in equal con¬ 
tempt the dictates of prudence and the deliberate judg¬ 
ment of the people. 

[From the New Orleans Picayune.] 

The two most important measures of the present 
Congress are that which postpones the day for specie 
resumption and that which empowers a commission of 
Congress to regulate the rates of railroad carriage. 
Both these measures have been carried by the votes of 
the South and West against the East. But for the al¬ 
most solid vote of the Southern carpet-baggers both 
would hav^ failed to become laws. Thus the two great 
principles for which the states-rights men of the South 
battled for half a century—a hard cash currency and 
the right of each State to regulate its own domestic 
affairs—find their supporters only in the East, which 
built up the carpet-bag governments, and now find 
their instruments returning to plague the inventors. 


The Poets on Paper Money. 

Blest paper credit! Last and best supply, 

To lend corruption lighter wings to ny. 

—Pope. 

■What is freedom? Ye can tell, 

That which slavery is too well, 

* # # * # 

’Tis to let the Ghost of Gold 
Take from toil a thousand fold 
More than e’er its substance could 
In the tyrannies of old: 

Paper-coin—that forgery 
Of the title deeds, which ye 
Hold to something of the worth 
Of the inheritance of earth. 

—Shelley. 

Mr. Speaker, everywhere industry is paralyzed; 

Everywhere there is stagnation of all business enterprises; 
Everywhere is enforced idleness aud approaching want; 
Everywhere are heard murmurs of fear aud discontent! 

One million creditors: thirty-nine million debtors! 

Deb'ors for the time being; 

Debtors till they coin the sweat of their brows into gold; 
Debtors till seed-time and harvest transform 
The golden grain into currency; 

Debtors till the felled forest, transformed in a thousand mills 
and conveyed in a thousand vessels, 

Supplies the ever increasing necessities of civilization; 
Debiors ’ill the earth, from its myriad subterranean passages, 
Has rendered to toil its infinite wealth. 

Hidden away since the foundations of the world; 

Debtors till the ceaseless manipulations of human skill and 
labor, 

Have converted the crude material 

Into the endless forms of beauty and utility, 

Which our humanity requires. 

I doubt if the people will quietly submit. 

They have not yet ground long enough 
In the prison-house of the Philistines, 

To bear these burdens unmoved. 

They are not sufficiently accustomed to make sport in the 
Temple of Dagon 

For the golden-robed lords and princes. 

Even in their alleged blindness they may bow themselves 
Upon the pillars of the money changers, 

And overwhelm all in a common ruin. 

Sir, capital is cautious; wealth is wary; Dives is crafty. 

Let not their representatives presume too much 
Upon the patience and long-suffering of the millions 
Whom they would force into idleness and want. 

From every quarter come ominous signs of warning! 

All around we hear 

Low murmurs of dissatisfaction! 

— Omar Conger, His Chant in Congress. 


The Financial Record is published by the Finance De¬ 
partment of the American Social Science Association, at 
their offices in New York and Boston. All communications 
respecting it may be addressed to the Secretary of the Asso¬ 
ciation, F. B. Sanborn, No. 5 Pemberton Square, (Room 21,, 
Boston; and all exchange papers, public documents etc., may 
be forwarded to the same address. 








































































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FINANCIAL RECORD. 

“WE NEED ONE THING BESIDES MORE MONEY, AND THAT IS BETTER MONEY ."—Senator Zach. Chandler. 

VOL. I. FRIDAY, APRIL 24, 1874. NO. 12. 


The Financial Record will be continued until further no¬ 
tice. and will be sent free of postage, to all persons who will re¬ 
mit 50 cents to the publishers. All editors who receive it are 
invited to send their papers in exchange. It will be no longer 
ublished by the American Social Science Association, 
ut for the present, as heretofore, communications respecting it 
may be addres>ed to the Secretary of the Association, F. B. San¬ 
born, No. 5 Pemberton Square, (Room 21,) Bo>ton; and all ex¬ 
change papers, public documents, etc., may be forwarded to the 
same address. 

National Promises. 

“The United States will pay bearer one dollar.” 

United States legal tender-note. 

“The gold coins of the United States shall be a one 
dollar piece, which, at the standard weight of twenty- 
five and eight-tenths grains, shall be the unit of 
value.” — Act of Congress, February 12. 1873. 

“The United States solemnly pledges its faith to 
make provision, at the earliest practicable period, for the 
redemption of the United States notes in coin.”—Act 
of March 18, 1874. 

The Veto. 

The President has returned to the Senate without 
his approval the bill to increase the legal tender and 
national bank issues, and has thereby inflicted a stag¬ 
gering, if not a fatal blow at inflation in every form. 
The bill was passed by majorities that render it impos¬ 
sible that it should be made a law over the veto. Even 
this measure was looked upon by the inflationists as 
merelya preliminary act. They did not profess to be sat¬ 
isfied with it. Anything milder they would not accept, 
anything stronger, or so strong, they cannot have. It 
may be accepted as a finality that during the remain¬ 
der of Gen. Grant’s term, there is to be not a dollar 
more of irredeemable paper. Had he signed the bill 
it would have been impossible for him to have resisted 
any further steps in the direction of inflation. Having 
vetoed it, inflation is absolutely prevented, unless, 
(which is highly improbable) he can be swerved from 
his present purpose, or circumvented by a parliamenta¬ 
ry device. 

The President deserves the most hearty thanks of 
all advocates of national honesty and sound finance. 
To have done otherwise than veto the bill, would have 
been to falsify all his past record, but nevertheless the 
idea has been industriously circulated that he would 
approve it; and until the veto was actually announced 
the fear of an executive approval was not dispelled. 
The objections he assigns are real objections. What 
the practical effects of the bill on the volume of money 
in actual circulation might have been was of infinitely 
less importance than its undoubted effect to increase 
the irredeemable debt owed by the government. The 
President should have credit for seeing this clearly and 
for putt-ng the argument stroDgly. Standing on this 
ground he cannot by any official act hereafter ^consent 
to inflation by a single dollar. 

We cannot overlook, or fail to acknowledge, that 
this step has been taken in opposition to the strongest 
of pressures. The Republican Senators and Congress¬ 
men from his own section and from the South were 
nearly unanimous for the bill. Some of his most trust¬ 
ed advisers have undoubtedly represented to him that 
his political existence depended upon his yielding to 
the policy they favored. Many of the ne wspapers which 
have contended strongly against inflation have directly 
advised the President not to veto the bill. Yet in the 
face of it all he has done an act which required more 
moral courage than anything else, duriDg his adminis¬ 
tration. Many a previous error will be forgiven in con¬ 
sideration of this one strong and righteous action. 

We fear that, while we are safe from the evils of in¬ 
flation, we cannot expect any wise legislation looking 
towards specie payments. We should not be contented 
with the defeat of inflation. The contest must be imme¬ 
diately resumed, and the cry must be “contraction.” It 
will frighten some, who dread a shock to business. But 
-unless we are to have a perpetual renewal of panics, 
we must find the shortest road to specie payments, and 
take it. If public sentiment is not ripe for contrac¬ 


tion, it must be made ripe. In no other way can we re¬ 
deem the pledges to which the President refers, and to 
which he is once more committed. Meanwhile, we hope, 
—yet without great hope,—that better counsels will be 
listened to at the Treasury Department than have lately 
been heard there. We want, first of all, changes in the 
personnel of the Department; and next we want a pol¬ 
icy, announced and adhered to,—a policy that shall lead 
us, slowly, perhaps, but uninterruptedly to the resump¬ 
tion of payments in hard money, the currency of the 
world. 

Tlie Effect of the Veto. 

In the Senate will probably be to add one or two 
votes to the scale of honest money, and the election of 
Gov. Washburn to succeed Charles Sumner adds an 
other vote. 01 the 73 Senators, 50 are now nominally 
Republicans, 19 Democrats and 4 Liberals. The vote 
on the inflation bill, which the President has just ve¬ 
toed, was 39 to 33, divided as follows: 

for inflation. 

Republicans— Allison, Borpman, Cameron. Carpenter, Clay¬ 
ton, Dorsey, Ferry, (Mich.), Harvey, Hitchcock, Iiifralls, Lewis, 
Logan, Morton, Oglesby, Patterson, Pease, Pratt, Ramsey, 
Robertson, Spencer, West, Windom. Absent, but would have 
voted yea— Sprague, Brownlow, Conover, Gilbert, Wright, 
Mitchell, Alcorn—29. 

Democrats— Bogy, Goldthwait, Johnston, McCrrery, Merri- 
mon, Norwood. Absent, but would have voted sea—Dennis, 
GordoD, Ransom—9. 

Liberal —Tipton—1. 

ANTI-INFLATION. 

Republicans— Anthony, Chandler, Conkiing. Cragin, Fre- 
linghuysen, Hamlin, Howe, Jones, Morrill, (Vt.), Sargent, 
Scott, sherman, Stewart, Wadleigh. Absent, but would nave 
voted nay—Buckingham, Ferry, (Conn.), Boutwell, Edmunds, 
Morrill, (Me.). Flanagan—20. 

Democrats -Cooper, Davis, Hager, Hamilton, (Md.), Kelly, 
Sauls bury, Thurman. Absent, but would have voted nay— Bay¬ 
ard, Stockton. Stevenson—10. 

Liberals —Fentou, Hamilton, (Texas), Schurz—3. 

Of the 39 votes for inflation, the fifteen old slave 
States furnish: Virginia, 2; North Carolina, 2; South 
Carolina, 2; Georgia, 2; Alabama, 2; Florida, 2; 
Louisiana, 1; Mississippi, 2; Arkansas, 2; Tennessee, 
1; Kentucky, 1; Missouri, 1; Maryland, 1—or 21 in 
all. From the 22 Northern States there were but 18 
votes, ali given by Republicans. 

Commenting on the vote, the Chicago Tribune says : 

A majority of the vote for inflation is from the Afri¬ 
canized States, and we have actually realized iu this 
vote the prediction of Mr. Morton, that, if the negroes 
were allowed to vote, their ignorance and inexperience 
would be felt in Congress to the iujury of the nation, 
and to the overturning of the well settled principles of 
true government. It is worthy of remark that on this 
question he led the African phalanx in person. The 
industry and production, tne capital and weaith of the 
nation, have ail been put in peril to satisfy tne demands 
of the bankrupt and impoverished people of the South, 
who, having wasted their capital and destroyed all 
their credit, look to an issue of worthless paper to sup¬ 
ply the need of both. 

What the Fathers thought of Paper 
Money. 

Washington wrote, in 1786:— I never have heard, 
and I hope never shall hear, any serious mention of a 
paper emission in this State (Virginia), yet such a 
thing may be in agitation. Ignorance and design are 
productive of much mischief. 

Jefferson, in 1813Excepting England and her 
copyist, the United States, there is not a nation exist¬ 
ing, I believe, which tolerates a paper circulation. And 
it is for this petty addition to the capital of the nation, 
this minimum of SI added to 133 1-3 or 133 3 4 per cent, 
that we are to give up our gold and silver medium, its 
intrinsic solidity, its universal value and its saving 
powers in time of war, and to substitute for it paper, 
with all its train of evils, moral, political and physical, 
which 1 will not pretend to enumerate. The overhearing 
clamor of merchants, speculators and projectors will 
drive us before them, with our eves open, until, a3 in 
France, under the Mississippi bubble, our citizens will 
be overtaken by the crush of this baseless fabric, with¬ 
out other satisfaction than that of execrations on the 
heads of those functionaries who, from ignorance, 
pusillanimity or corruption, have betrayed the fruits of 
their industry into the hands of projectors and swind¬ 
lers. 

Franklin, in 1771:—I am glad to understand that 
you are taking measures to restore the value of your 


money by taxing largely to reduce the quantity. I be¬ 
lieve no financier in the world can put you upon a more 
effectual method. I lament with you the many mis¬ 
chiefs, the injustice, the corruption of manners, etc., 
that attended a depreciating currency. 

Richard Henry Lee, in 1785:—Is it possible that a 
plan can be formed for issuing a large sum of paper 
money by the next Assembly ? I do verily believe that 
the greatest foes we have in the world could not devise 
a more effectual plan for ruining Virginia. 

Madison, in 1786, referred to the “general rage for 
paper money,” and in a speech in opposition to it, in 
the Virginia Legislature, declared the system to be 
“unjust, unconstitutional, anti federal, unnecessary and 
pernicious. 

John Adams said:— I cannot but lament,from my in¬ 
most soul, that lust for paper money which appears in 
some parts of the United Spates. There will never be 
any uniform rule, if there is a sense of justice, nor any 
clear credit, public or private, nor any settled confi¬ 
dence in public men or measures, until paper money is 
done away. 

James Wilson, one of the framers of the Constitution, 
said: “It will have a most salutary influence on the 
credit of the United States to remove the possibility of 
paper money. This expedient would never succeed 
while its mischiefs are remembered, and as long as it 
can be resorted to it will be a bar to other resources.” 

In the Convention which framed the Constitution in 
1787, a discussion took place as to the insertion of a 
clause to this effect: “And to emit bills on the credit of 
the United States.” On finally taking the question 
upon striking oui the clause conferring upon Congress 
the power to issue paper money, the vote was taken by 
States. The vote stood in favor of striking out, nine 
States; against striking out, two States. The States 
voting against the paper money were New Hampshire, 
Massachusetts, Connecticut, Pennsylvania, Delaware, 
Virginia, North Carolina, South Carolina and Georgia, 
while New Jersey and Maryland only voted to retain 
this power in the Constitution. 


Wliat the great Preachers Think. 

HENRY WARD BEECHER. 

Anything which weakens public confidence, weak¬ 
ens society. I cannot pass over even the gigantic wick¬ 
edness of our Government in printing lies by the hun¬ 
dred thousand. 

REV. DR. BACON. 

Sooner or later, bitter experience will make tho 
people know that dishonored promises to pay money- 
promises issued with a deliberate intention to break 
them—are not money but lies. Simpletons in Con¬ 
gress a9 well as elsewhere—or, if not simpletons, theu 
knaves—are giving out that greenbacks will circulate 
a9 money so long as the people have confidence in the 
Government; but have those wiseacres inquired how 
long the people can be expected to have confidence in 
a Government which, instead of redeeming its prom¬ 
ises and dealing honestly with citizens who happen to 
have pecuniary claims against it, issues fraudulent lies 
by the million, and is always ready to redeem one lie 
with another. 


Spirit of the Press. 

[St. Louis Republican.] 

The country would this day be two thousand million 
dollars better off than it is it a legal tender had never 
been issued, or if ali the States had repudiated them, as 
Nevada and California did, and thus forced the govern¬ 
ment to withdraw them. The legal-tender act, which 
is the central feature of the whole Republican scheme 
of finance, was the paternal blunder of a brood of dis¬ 
asters, which all the partisans and pundits in Congress 
have miserably failed to prove to be blessings. 

[Indianapolis Journal.] 

But, unsatisfactory and illogical as the action of Con¬ 
gress is, we are disposed to accept it as a finality, and 
hope that business will speedily adjust itself to the new 
order of things. In fact, we expect that the people will 
soon be so immersed in digging and delving, mining 
and manufacturing, buying and selling,trading and mak¬ 
ing money, that they will cease to trouble themselves 
about the currency. At all events, the present allow¬ 
ance will do till we outgrow it. 

[Indianapolis News.] 

Congressman Coburn calls paper-money "the poor 
man’s currency.” Yes, it has been the poor man’s cur¬ 
rency with a vengeance. It has made him poorer than 
j he w as, and it will keep him poor. It has been the cur- 
. rency of the rich, of the speculators, ot those who live 
1 not by conferring services upon their fellows, but by tak- 
! advantage of unequal conditions to oppress them. 


























30 


THE FINANCIAL RECORD. 


[Baltimore American.] 

When Mr. Kasson held a ten dollar greenback in one 
hand, and a ten dollar gold piece in the other, and asked 
his brother Congressmen which they would rather have, 
he condensed into a speech of a minute's length pretty 
nearly all that has been, or can be, said on the subject 
of an irredeemable paper currency. 

[Wilmington (Del.) Commercial.] 

Everything tending to inflate prices, promote specu¬ 
lation, and encourage extravagance is folly indeed, and 
anything that keeps up the gold premium, and post¬ 
pones the day of specie resumption is quack doctoring, 
surely. It is true that we want more light. Our situa¬ 
tion is not like that of European nations, and though 
we cannot escape the operation of financial laws which 
are universal, they may affect us in a modified degree 
corresponding to our modified conditions. 

[Lewiston (Me.) Journal.] 

Let not the laborer, the farmer, the mechanic, the 
man who expects to earn money and not have some- 
bo ly give it to him, be deceived by this cry that gov¬ 
ernment can relieve him by issuing more greenbacks. 
The issue of more irredeemable currency simply means 
higher prices for all the necessaries of life, and a much 
smaller advance in the price of labor which is to be ex¬ 
changed for them. 

[Memphis Avalanche.] 

There was something more than sarcasm in Congress¬ 
man Cox’s suggestion to make every greenback dollar 
a legal tender for three dollars, every two dollar green¬ 
back a legal tenderfor six dollars, and so on. It would 
but carry the logic of inflation to its legitimate conelu 
sion. A piece of irredeemable paper known as a dollar 
may as well be declared three dollars as a third that 
Bum. 

[Baltimore Gazette.] 

Congressman Hawley, of Connecticut, thinks the 
$14,000,000 bill is “a step toward repudiation.” So we 
think—repudiation in its broadest sense, not only 
financially but politically—repudiation by the people of 
the Radical tinkers. 

[Galena Industrial Press.] 

The Republican party has at last found a policy. It 
consists in creating fictitious money values by the pro¬ 
cess of watering stock. We are impoverished with 
only $356,000,000 of greenbacks; with $400,000,000 it is 
expected the crops will move and we shall begin to 
live. To this we can add from time to time as the po¬ 
litical situation may require. 

[Fort Wayne (Ind.) Sentinel.] 

The country may now be considered as having fairly 
embarked upon the sea of paper money and uncertain 
values. All efforts to secure even a recognition of the 
necessity of a remote return to specie were voted down. 
Senator Morton wanted the currency left so that the 
Secretary of the Treasury could make a new issue when 
desirable to speculators. 

LX. Y. Evening Mail,] 

We warn such ambitious and reckless politicians as 
Morton and Logan, however, that neither one of them 
can get the vote of New York in a nominating conven¬ 
tion for the Presidency, nor can any other man who is 
identified with a policy of confiscation and dishonesty. 
They are familiar enough with the history of Republi¬ 
can Presidential Conventions to estimate their chances 
of success—against the New York delegation arrayed as 
a unit, or against the vote of New York at the polls. 

[Brooklyn (N. Y.) News.] 

It is the purpose of nearly all political parties to effect 
financial reforms by legislation, and now that the ques¬ 
tion of slavery has been disposed of there is really no 
other vital question before the country than that of the 
finances. The country is now in very nearly the exact 
condition it was in after the election of Jackson, when 
the division of parties was distinctly made by a ques¬ 
tion of a continuation of the United States Bank. 

[Cincinnati Enquirer.] 

Ever active and alert, Gen. Butler is constantly on 
the watch, and not a move has yet been made by the 
agents and attorneys of the gold gamblers and thieves 
of New York and Boston which has not been seen and 
disconcerted. The business and laboring men of the 
country owe Old Ben. a debt of gratitude for the faith¬ 
ful manner in which he has led the friends of industrial 
and commercial relief in the House of Representatives. 

[Rack Islanl Jll.) Union.1 

The people of the Northwest are fully aware of the 
baleful effects of watering the stock of railroad corpo¬ 
rations. But, while clamoring for legislation which 
shall stop this fraud, the people of the West shut their 
eyes to a greater evil, or tacitly encourage it. The pro¬ 
posed “expansion” of the currency is nothing lc38 than 
watering greenbacks—watering national bank notes. 
The first step in inflation will but lead to a second and 
a third, and there wiil be no change of policy until the 
inevitable result is reached—general impoverishment 
and national bankruptcy. 

[New York Herald.] 

It cannot be denied that there are rich men to whom 
inflation will prove an injury, and that there is a class 
of debtors who are comparatively poor men and whom 


it will relieve ; but these are few in number by compari¬ 
son with that largest class in the country, the people 
who work for wages. By comparison with these the 
men to be relieved are a miserable minority, and relief 
to this minority i9 to be purchased by oppression of 
every laboring man or woman—an oppression that will 
reduce them to the extremity of distress. And this op¬ 
pression is inflicted deliberately, in the hope to utilize 
the popular distress by leading the whole people to as¬ 
sent to repudiation. 

[Louisville Courier-Journal.] 

Inflation has been championed by the “kite flyers” 
of all sections, and has been artfully disguised by its 
advocates as a means of relief earnestly desired and 
prayed for by the most solid classes of our citizens. In 
flation is not a Western nor Southern measure, but a 
speculative contrivance, pure and simple and unre¬ 
deemed, and without regard to sections. The farmer 
is wise enough to see this, as well as the solid merchant 
and banker. Such clashes in the West have furnished 
but little of the encouragement to currency expansion 
popularly attributed to them. Congressmen have de¬ 
rived their inspiration from the railroad men, from 
stock jobbers, lrom over traded merchants, from bank¬ 
rupt projectors of various kinds. ToM Scott i9 a 
pronounced inflationist, Henry Clews, William 
Sprague, and ail that breed of lame ducks are infla¬ 
tionists. These are the men who propose to tax the 
entire country for the means to repair their broken 
fortunes. 

[Philadelphia Chronicle.] 

The dispute about the currency is only a part of the 
contest which always has gone on and always must go 
on, but which is 90on to culminate in this country, as 
it has in other countries, in a fierce struggle for the 
mastery, between the destructive and the conserving 
elements of society. The Butler who advocates the 
issue of irredeemable paper money, and the violation 
of the pledged faith of the country, is the same Butler J 
who advocated the salary grab ; who proposes to grab 
the money paid to the government in trust for the Ala¬ 
bama claimants; who aided and now defends the San¬ 
born contracts; who insists upbn the right of officials 
to pay their private expenses out of the public funds ; 
who employs the public service as an instrument to 
compass bis personal ends. And Butler.be it remem¬ 
bered, is only a representative; if it were not Butler 
it would be somebody else. 


Honest Money for Poor Men. 

[From a speech by Hon. W. W. Phelps of New Jersey, spoken 
in Congress, April i, 1874.] 

THE FIRST DUTY. 

Mr. Speaker, we are bound to give the people of 
these United States a sound currency. We are bound 
to give them specie payments; for only gold, or a cred¬ 
it based on gold, is a sound currency. We are bound, 
whether we be Liberals, Republicans, or Democrats, by 
express promise; we are bound by provisions of a law, 
the first ever signed by our Chief Magistrate; we are 
bound by the oath we took as members of this House 
to support the Constitution. We are bound by the 
conventions of Philadelphia, Cincinnati and Baltimore, 
which pledged the three great parties to “speedy re¬ 
sumption;” we are bound by the act of March," 1869, 
wiiicli “solemnly pledged the public faith to make 
provision at the earliest practicable period for the re¬ 
demption of the United States notes in coin;” we are 
bound by the Constitution, which wa9 formed “to pro¬ 
mote the general welfare.” 

Can we better provide for the general welfare than 
by giving to the people a uniform, stable currency ? 

I believe, and I can show, that while the moral evils 
resulting from a depreciated currency fall uniformly; 
the material ill, the real suffering and loss, fall upon 
the laborer and the farmer. The capitalist and mer¬ 
chant, in the resources of varied exchanges and varied 
investments, may adjust and shift the ioss; the poor 
man receives it all. Wall Street, Beacon Street, and 
Chestnut Street may e=cape; the farm and workshop, 
never. Therefore I urge to day the resumption of 
specie payments in the name of the farmer and mechan¬ 
ic. 

"WHAT 19 MONEY ? 

I could spend much time in proving financial truths 
that were never disputed before this year of our Lord. 
Why should I? Shall I put up a man of straw, to 
knock him down ? Shall 1 tell truths that the theory 
and experience of the world have established ? Can I 
write them better than Smith, Ricardo, Say, Rice, and 
Bagehot? Can I speak them better than Jefferson, 
aud Benton, and Webster, and Clay ? If there is a 
man who believes there is any other basis for a sound 
currency than gold, and who maintains that belief in 
the face of the world’s testimony, and the world’s ex¬ 
perience, I cannot convert him; I will not attempt it. 
What is money ? It is the measure of value. It is the 
instrument devised to transact the first step in an ex¬ 
change. It is the commodity used to estimate the rel¬ 
ative value of other commodities. Before we can ex¬ 
change commodities we must know what is their real 
value. We must take a commodity of fixed value, and 


dividing it into units, make these represent the ratio 
which other commodities bear to each other, ihis 
measure of value is money. This measure of value is 

gold. Why? Because gold has the mechanical qual¬ 
ities for such a measure. It is divisible and indestruct¬ 
ible. It has, too, a universal and stable value. Now 
money must have value, because it is used to measure 
value. If we wished to measure the length of commod¬ 
ities we should take a measure that had length. Did 
we wish to measure weight, we would take as a meas¬ 
ure a commodity that had weight. So when we meas¬ 
ure values we must have a measure that ha9 value. 
And gold i 9 the only article that has a universal and 
stable value. Hence for our money, for our measure 
of value, we take gold. But besides money we hear 
of currency. 

WHAT 19 CURRENCY? 

Currency i 9 the medium of exchange. If i9 the in¬ 
strument that performs the second process in exchange. 
After money has fixed the relative values of commodi¬ 
ties, currency, makes the exchange. And what is cur¬ 
rency? What does it consist of? Mainly of credit. 
Credit in one of its many forms, draft and note, bill 
and check and account. So we have two different in¬ 
struments, and two sets of names for them ; one set is 
the measure of value—gold, money ; the other is the 
medium of exchange—paper credit, currency. And 
here is the only opportunity for mistake in keeping this 
distinction. Money is the measure of value—is gold. 
Currency is the medium of exchange—is paper repre¬ 
senting gold. But as the principal can do what its rep¬ 
resentative can— money, gold, can also discharge the 
second process of exchange, can also be currency. It 
can perform the two functions. But when money per¬ 
forms the second function, makes the exchange, it is 
currency. Hence a deal of confusion. From this we 
escape by bearing always in mind that while money is 
currency, currency, except the small part which is gold, 
is not money. And perhaps just here it is well to say 
that no buiiiomst, no hard money man, as far as I 
know, wants to use gold for currency. We want to 
use gold for money, for the measure of values. We 
want to use paper as currency, as the medium of ex¬ 
change. In other words we think gold the best meas¬ 
ure of value; paper the best instrument of exchange, 
the best currency. But it must be paper that repre¬ 
sents value, that represents gold, and can be turned 
into it. Why, then, are we dissatisfied with our pres¬ 
ent currency, which is paper ? For the reason that it 
is not real currency, it does not represent value. It 
was not born, it was made. 

WHAT IS THE ORIGIN OF A SOUND CURRENCY? 

It is born in some transaction, and represents some 
value, money or property, which the transaction con¬ 
cerned. This i9 true of the lowest and highest forms 
of credit. Take the earliest conception of currency. 
It is in the very infancy of tra.de before mopey is yet 
used as a measure of value. My friend has a skiff on the 
Hudson; I have a skiff on the Potomac. We wish to 
exchange. My friend takes my skiff. He gives me a 
writing which empowers the bearer to take his. The 
writing is a draft, the simplest form of credit, the first 
piece of currency. And in the market any man who 
wants the skiff, or knows the value of it, will accept it 
as currency. 

Take a step further in the development of currency. 
Money i3 now used as a measure of value, and ex¬ 
changes are to that degree simplified. My friend this 
time wishes to buy my house. We fix the price. He 
has no money, but I trust him. He gives me a written 
promise to pay. Here is another form of credit. I 
walk off with another kind of currency—the promissory 
note. This note, too, represents property, value; lor 
it represents the house which my friend owns, and 
which stiil exists as a means of payment. If my friend, 
when the note falls due, has the house, he can by sale 
or mortgage, pay it. But suppose my friend has sold 
the house before the note falls due. If he sold it, he 
sold it for something—money or currency or property 
—and he holds the money or draft or property in place 
of the house and the representative of his note, and 
ready for its redemption. 

But before my friend’s note fell due, I needed a stiil 
higher kind of currency, one capable of wider circula¬ 
tion. Strangers refuse it; sol go to my bank. The 
bank wiil discount if I will take the bank’s promise. 
The bank’s promise passes as money; so I take it. 
This time I go out with another form of credit—anoth¬ 
er kind of currency—the bank note. So under natur¬ 
al laws currency in all forms comes into the volume of 
circulation, as the result of transactions, a3 the repre¬ 
sentatives of value. Its volume, therefore, regulates 
itself. There is as much as there are transactions, as 
there are values, and no more. But there comes a dis¬ 
turbing element. The Government injects it into this 
natural stream fed by the business of the country. 
Government issues its promises, not as the representa¬ 
tive of gold, not as the representative of property, but 
as the representative of debt. Natural currency comes 
as the representative of wealth—the Government cur¬ 
rency as the representative of poverty. 

Why, then, do not the laws of trade eject it, this 
foreign element—this bastard currency ? They would. 


























THE FINANCIAL BECOBD. 


81 


Men would refuse to take it. Nature would cure her¬ 
self. But supreme sovereignty interferes and forces 
it upon the people. The people submit because they 
are law abiding. 

THE LIMITS OF CREDIT. 

Credit can act oeneticently -till it reaches the con 
sumer; there it should stop. Bankers and merchants 
are simply agents for the exchange of commodities, 
and as such they may safely promise, to pay with mer¬ 
chandise in existence, not for tiieir own consumption, 
but for sale; and thus they may conduct their opera¬ 
tions forever, without failure, through'the various de-' 
grees of subdivision until the actual consumer is 
reached through the retail dealer. Here the point is 
reached where credit is most pernicious and should be 
avoided. The promises issued by the consumer, 
Whether it be the government or the laborer, are not 
from their nature currency, and any effort to force their 
circulation produces only confusion and loss. But 
this is what our government did when, in the stress of 
war, it issued its promises against property, which it 
consumed or destroyed. Hence came the greenback ; 
fruitful source of all our woes. This increased the cur¬ 
rency beyond its natural limits. It was in excess. 
There was more currency than there was property for 
it to represent, and there was a depreciation. Let me 
not waste time to chronicle the now familiar effects of 
a depreciated and irredeemable currency. It is ulwaj's 
in excess. This excess stimulates extravagance and 
speculation. 

HOW PAPER MOSEY HARMS THE POOR. 

I pass this to show that the worst evils of an un¬ 
sound currency fall upon the poor. The harm of wrong 
legislation in finance, as in taxation, falls and rests at 
last upon them. As a direct consequence of depreci¬ 
ated money, prices fluctuate, so the man who bays 
cannot tell for what he will sell, or what hi9 money 
will be worth when he gets his pay. Against this un¬ 
certainty the rich man who sells can insure himself by 
adding a percentage to his price. The poor man who 
buys, buys to consume, not to sell again, and pays this 
percentage out of his poverty. The rich man adds to 
the price of his commodities the premium on gold at 
each rise, and by continual exchanges adjusts or shifts 
the loss. The poor man has but one thing to exchange 
—his labor—and does not know the hourly,, daily, or 
weekly rise of gold ; and does he, he cannot daily, 
hourly, weekly, or even monthly add it to his wages. 
He cannot readily make new contracts for his labor, 
and, unfortunately, it is the only contract he can ever 
make. So the premium on gold reaches his wages last 
of all. Certainly, then, an irredeemable currency is 
not for the poor man. If it is lor the benefit of any, 
it is for the rich man and for the speculator. The 
more rich the man, the more desperate the speculator, 
the more easily he avoids the losses; the more cer¬ 
tainly he profits by the fluctuations. The poor man, 
who has nothing to sell but his labor, and who has 
everything to buy—lodging, food, clothing—finds his 
labor receiving only the premium on gold. 

PRICES AND THE GOLD PREMIUMS. 

Naturally the increase in price will be least in those 
commodities which pass directly from producer to cus¬ 
tomer, and greatest in those which are subjected to 
most frequent transfers. When Mr. Lowe buys his 
tea in China, he pays for it in gold. The Chinese as 
yet are not intelligent enough to accept the best cur¬ 
rency the world ever saw. When the tea is in his ware¬ 
house—freight, duties and exchange all paid—lie fixes 
the price. He adds to cost the usual percentage of 
profit and the premium on gold ; but he does not stop 
here. He sells on time, aud before the time expires 
gold may rise two or three per cent. He does not 
think it will rise so much; but it may, and, as he sees 
no propriety ia running any risk, he adds three percent 
and the jobber gets Mr. Lowe’s tea into Chicago at 
a cost of three per cent above the premium on gold, 
and when my friend from Kansas stopped over iast 
November and bought his family chests to send to Wy 
andotte, the Chicago merchant said: “This M. C. will 
not remit before the Sell of next month ; by that time 
some more of the $44,000,000 will be out and the pre¬ 
mium on gold, instead of being six, as it is now, may 
be ten or twelve; I will add five per cent to guard 
against loss.” So when this tea reaches the little 
grangers at Wyandotte, though gold is up only ten per 
cent, tea i?un eighteen per cent; three per cent added 
by the New York importer, and five per cent added by 
the Chicago jobber. So in any article, especially 
manufactured articles, where the materials have passed 
through many hands, we shall have the price naturally 
raised far above the gold premium. 

This is why the Western farmer suffers more from a 
depreciated currency than any one eise, except the 
poor man who has only his own labor to sell. Why ? 
Because the Western farmer gets for his produce only 
the price of the foreign market. They raise and sell 
cotton, pork, beef, corn, wheat, cheese. The price of 
these in New York is always the price in Liverpool, 
less the price of transportation. It must be so. It' the 
price in Liverpool were more we should export or raise 
the home price. If the price in Liverpool were less we 
should cease to carry it there and the surplus accumu¬ 


lating in New York would force the New York price 
down to the Liverpool level. This is the theory, and 
this is the fact, that Liverpool fixes the price of our 
farm products. “But,” says^the friend of an irredeem¬ 
able currency, ‘The farmer gets his price in gold and he 
gets the benefit of the premium; how then is he hurt ?” 
He is hurt because the depreciation of our currency 
does not measure the increase in the prices of the com¬ 
modities he buys. Say goid is 110; say 10 marks the 
depreciation of our dollar, and the farmer gets a gold 
dollar, and changes it into $1.10, will his $1.10 buy 
what it used ? No; rent,-clothing, food, tools, horses, 
tea, coflee, all have advanced beyond the gold premium, 
and we have seen the reason. Each dealer added a 
percentage to guard against the loss of an uncertain 
currency'. And what is the result to the farmer? He gets 
for his produce, in paper money, what he got before 
the war, plus the premium on gold; but everything he 
buys, lie buys at an advance greater than the premium. 
Wheat in Chicago before the war. was 31.10 per bushel, 
good sugar, 9 cents per pound. Now, in the same mar¬ 
ket, wheat brings $1 25 and the same sugar 111-2 cents. 
The price of the wheat shows the premium of gold, the 
price of the sugar shows the premium of gold plus an 
advance of 12 percent. The importer and jobber have 
not only charged the premium ou gold to the consumer, 
they have also taken from him an extravagant rate for 
shielding them from further loss. So here the fluctu¬ 
ating currency was a source of wealth to the rich trader, 
a source of poverty to the farmer and consumer. All 
the manufacturers and merchants have made themselves 
their own insurers. They have charged the premiums, 
which they themselves fixed, and the laborer aud far¬ 
mer have had to pay them. 

WHAT HONEST MONEY WILL DO. 

In the name, then, of the laborer who consumes, and 
the farmer who produces, whose welfare is the welfare 
of the country, and whose welfare is sapped by a dis¬ 
honest currency, give us a currency which has gold for 
its basis. This much at least we can do. We cannot 
do all; we cannot cure ail the evil9 of the financial 
world. Men will still fail; panics will stiii blast; In¬ 
dianapolis will still want money; corn raised too far 
from market will still warm the disappointed husband¬ 
man; rail-road robbers will again drive their four-in- 
hands; the wicked will flourish; the good will pine; 
Lazarus will lie outside; Dives will feast inside—in a 
word, man will stiff be human whatever currency tri¬ 
umphs. But with a redeemable currency we can make 
fewer the failures, fewer the panics; fewer the Laza- 
ruses, fewer the Diveses, less the suffering, less the vice. 
Yes, I admit with it—even with an honest currency— 
we shall still have panics. A world which does its busi¬ 
ness on a credit basis cannot escape them; and this 
basis is one which grows wider as the worid grows 
older. Specie payments will not prevent panics, but 
they will retard and cure them. 

And here, too, is the folly of an argument based on a 
supposition that governments can tell how much legal 
money is needed for a nation’s wants. The per capita 
theory is a vain one; for the amount shifts from 
day to day, from market to market. In a normal con¬ 
dition New York needs five millions of legal money 
to do the work of one hundred millions; in times of 
panic New York needs one hundred millions of legal 
money to do the work of one hundred millions. What 
amount shall the anxious legislator manufacture for 
New York’s wants? Shall he make it one hundred 
millions? Then it will take two dollars to buy a ten- 
penny loaf when there is no panic. Shall he make it 
five millions ? If the panic continues he can buy his 
ten-penny loaf for half a cent. I would counsel the 
anxious legislator under these circumstances to hold off, 
and let God and nature take care of man’s wants. 

FUNDAMENTAL PRINCIPLES. 

Without further discussion let us assume : 

1. That gold is the only basis of a sound currency. 

2. That paper redeemable in gold is the best curren¬ 
cy. 

3. That currency must always perform the larger 
part of the world’s exchanges. 

4. That currency is that form of credit which gets 
its birth in business transactions, and represents an ex¬ 
isting value—either gold or property. 

6. That currency, untrammeled by governmental 
interference, regulates its own volume. 

6. That governmental credit, not representing gold 
in the Treasury, not issued against property in exist¬ 
ence, but against property consumed or destroyed, is a 
bastard currency; and, as a foreign and superfluous 
element, depreciates the currency of the people. 

7. That a depreciated cui’iency inflicts moral ill upon 
all classes, but throws the material loss arid suffering 
mainly on the farmer and laborer. 

8. That a depreciated currency tends to creat8 and 
aggravate panics. 

9. That it is our duty to legislate in the direction of 
specie payments- 

THE COST OF RESUMPTION. A REPLY. 

We can regain specie payments only at a cost. But it 
is wortli the cost. The people are ready to bear the 
pain; they clamor for the knife that shall save them. 
Bhall we lack the courage to apply it to a willing pa¬ 


tient? It needs only the determination, the start. Be¬ 
gin to rid us of a depreciated currency that stops our 
trade, saps our morals, and makes the rich richer, the 
poor poorer. Begin to give us a sound currency, the 
dollar of the fathers, the dollar of the world. We freed 
the slave ; we saved the Union; we will pay our debt. 

Mr. Farwell. I desire to a-k my friend from New 
Jersey a question. He announces that lie speaks in be¬ 
half of the poor laborer of his State and of other States, 
who, he says, has suffered and is suffering on account 
of this depreciated currency. The question I desire to 
ask him is this: Whether the advanced price of labor 
is not four times greater than the present premium ou 
gold ? 

Mr. Phelps. My answer to that would be, first, to 
deny the premises. I do not think “the price of labor 
is four times greater than the present premium on gold.” 
If my friend is correct in supposing tiiat labor has in¬ 
creased fourfold beyond the premium on gold, I make 
this reply : Much more certainly than he can show the 
price of labor has increased four times beyond the 
premium of gold; I can show the price of living has in¬ 
creased six times. Grant that the laborer gets 40 per 
cent, more than he once did, it costs him 60 per cent, 
more to live than then. And my answer to him now, 
which has been categorical, does not include the moral 
influences of a depreciated currency, which ultimately 
stops manufactures, ultimately stop's trade, and so tends 
to deprive the laborer of all wages. 

What is the result? A depreciated currency slowly 
raises the wages of the laborer; but at last the bubble 
bursts. Laborers instead of obtaining advanced wages 
cannot obtain wages at all. And if the gentleman 
wants to know whether the laborer with our depreciated 
currency gets an increase of wages four times greater 
than the premium on gold, let him go to Paterson and 
a9k those five thousand mechanics who do not get any 
wages at all. 

Two Voices. 

A HARD MONEY DEMOCRAT, 

Senator Thurman writes to a friend in Ohio : 

I knew full well how easy it would be to acquire tem¬ 
porary popularity by joining the inflationists, but I 
never have done, and I never will do, what I know to 
be wrong, in order to acquire unmerited praise. Be¬ 
sides I cannot disregard the teachings of that party to 
which I have ever honestly belonged, and which incul¬ 
cated, from the very first day of its existence, the doc¬ 
trine that irredeemable paper money is one of the 
worst evils with which any country can be cursed. I 
shall in due time expose the misrepresentations to which 
I have been subjected, and shall then be content to 
leave time and the good sense of the people to vindi¬ 
cate or condemn me. 

A HARD MONEY REPUBLICAN. 

Rev. Dr. Bacon of New Haven writes to Congress¬ 
man Phelps: 

Everybody knows that this currency question is not 
at all a question between the Republican party and the 
Democratic. Both parties are pledged, by their latest 
platforms, to the same policy on this subject—the poli¬ 
cy of honestly paying the debt represented by dishon¬ 
ored Treasury notes ; while in Congress the members 
of each party regard the pledges given in those plat¬ 
forms just as they regard the greenback promises is¬ 
sued in the name of the nation—promises that may be 
circulated among the people, but need not be redeemed. 
Neither party dares to hold a caucus for the purpose of 
deciding what shall be done on the most momentous 
question that has arisen in this country since the aboli¬ 
tion of slavery. To me the fact is proof that both par¬ 
ties are moribund. As parties, they dare not face the 
question of the hour. In relation to that question, they 
are just where the Whig party was in relation to slave¬ 
ry ; and as the Y/hig party died because it dared not 
and could not grapple with the question which over¬ 
shadowed all other questions, so both parties may die 
when the question which they dare not meet shall grap¬ 
ple them. 


The Sum aud Substance of it. 

The Springfield Republican thus condenses the Finan¬ 
cial Legislation, past, present and future, of the Con¬ 
gress now in session. 

By the Honorable Senate and House of Bepresentativea of 
the United States, in Congress assembled it is.jointly 

Resolved, That creditors who lend to the government, with¬ 
out interest, have no claim ever to receive the principal of 
their loans. 

Resolved That substance and shadow, performance and prom¬ 
ise. thing- and their names, are the sam ■; therefore, the I O U 
shall be a legal tender for all debts and obligations of whatever 
nature, past and future. 

Res<fved, That all tenses, except the present, are abolished. 

Resolved, That the sam of one million of dollars [greenbacks] 
be, and the same is herebv appropriated, for a bronze eques¬ 
trian statue of the Hon. Wilkins’Mioawber, to adorn the U. 
S. Treasury Department. 

Resolved, That a colossal statue of Gloucester granite be 
erected in the rotunda of the capitol. to the memory of the il¬ 
lustrious John Cade, M. P., and that the 3um of one million 
and five hundred thousand dollars be, aud the same is hereby 
appropriated, for the same. 

Resolved, That Hon. Benjamin F. Butler of Massachu¬ 
setts be a Committaa oi' seven to carry into effect the foregoing 
resolves. 













SPECIAL 


NOTICE. 


Untcmau Sorial Stifnte Association, 

Boston, Apbil *25, 1874. 

The customary General Meeting of the Association will take place this year at New York, from the 19th to the 23d of May. The 
persons engaged to read papers, with their subjects, and the order of business, so far as determined upon, are as follows : 

first session. (Tuesday, May 19, 7.30 p. m.) 

An Address by the President, George William Curtis, Esq. 

A Report from the Finance Department, by Prof. W. G. Sumner, of New Haven. 

A Paper on Financial Administration, by Gamaliel Bradford, E-q , of Boston. 

second session. ( Wednesday, May 20, Bp. m.) 

A Paper by Rev. Dr. Woolset, of New Hiven, on The Exemption from Capture of Private Property upon the Sea. 

A Paper by Willard C. Flagg, Esq., of Moro, III., on The Farmer's Movement in the Western States. 

A Paper by Gardiner G. Hubbard, Esq., of Boston, on American and European Railroads. 

third session. (Wednesday Evening, 8 o’clock.) 

A Paper by D. A. Wells, Esq., on Rational Principles of Taxation. 

A General Discussion on Financial Questions. 

fourth session. (Thursday, May 21, 3 P. M.) 

A Paper by Dr. J. Foster Jenkins, of Yonkers, New York, on Tent Hospitals. 

A Paper by Dr. Alfred L. Carroll, of New York, on Hygiene in Schools and Colleges. 

A Paper by Dr. Albert Dat, of Boston, on The History and Results of Inebriate Asylums in America. 

A Report from the Health Department. 

fifth session. (Thursday Evening, 8 o’clock.) 

A Paper by Hon. Charles A. Buckalew, of Bloomsburg, Pa., on The New Pennsylvania Constitution. 

A Paper by President D. C. Gilman, of the University of California, on California an l its Relations with the other United States. 

(sixth session. Friday, May 23, 3 p. m.) 

A Report by the General Secretary, F. B. Sanborn, on The Work of Social Science in the United States. 

A Report from the Department of Social Economy, on Pauperism in the City of New York. 

A Paper by Z. R. Brockway, Esq., of Detroit, Mich., on The Reformation of Prisoners. 

A Report from the Department of Jurisprudence. 

(seventh session. Friday Evening, 8 o’clock.) 

A Paper by Hon. Andrew D. White, of Cornell University, on The Relation of National and State Governments to Advanced Education. 

A Paper by William W. Greenough, Esq , of Boston, on Public Libraries. 

A Report from the Department of Education. 

At the First and the last Session the President (Mr. Curtis) will occupy the Chair, Dr. Woolsey will preside at the Second Session, and Mr. D. 
A. Wells at the Fifth Session. The Chairmen at the other Sessions will be announced hereafter. A few person? will be invited to discuss each pa¬ 
per in speeches often minutes each. On Wednesday, May 20, at 10 a. m., there will be a Conference of the Boards of Public Charities in the United 
States, and a conference of Boards of Health on Thursday, May 21, at the same hour. 

All the Sessions and the Conferences of the Boards of Health and Public Charities will be held at the Hall of the Young Men’s Christian 
Association, corner of Fourth Avenue and 23d Street. 

OFFICERS OF THE ASSOCIATION, 1874. 

President, GEORGE WILLIAM CURTIS, New York . 

Vice-Presidents : Samuel Eliot, Boston; Edward L. Youmans, Neio York; H. C. Lea, Philadelphia ; Theodore D. Woolsey, New Haven ; J. W. 
Hoyt, Madison, Wis.; Georgs Davidson, San Francisco ; D. C. Gilman, Oakland, Cal.; William T. Harris, St. Louis, Mo ; D. A. Well9, Norwich, Conn. 

Secretary, F. B. SANBORN, 5 Pemberton Square, Boston, Mass. 

Treasurer, J. S. BLATCHFORD, 13 Exchange Street, Boston, Mass. 

Directors: Emory Washburn, Charles W. Eliot, Prof. Benjamin Peirce, CamWidge ; S. G. Howe, T. C. Amory, C. C. Perkins, J. M. Barn¬ 
ard, R. M Mason, S. A. Green, Roger Wolcott, Boston; Edward C. Guild, Waltham; E. C. Wines. New York; Charles I. Walker, Detroit, Mich.; Mrj. 
John E Lodge, Mrs. S Parkman, Mrs. Caroline H. Dali, Mr3. Henry Whitman, Miss A. W. May, Miss Alice S. Hooper, Boston. 

The above-named persons with the Chairmen of the Five Departments, make up a Council or Executive Committee of 36 members which 
meets in Boston, on the last Saturday of every month. The Department Committees are as follows: 

I. EDUCATION. C. W. Eliot, LL.D., President of Harvard College, Chairman; Miss A. W. May of Boston, Secretary. Prof. Benjamin 
Peirce, Mrs. Henry Whitman, Prof. J. M. Peirce, Cambridge; John D. Philbrick, Charles C. Perkins, Mrs. S. Parkman, James M. Barnard, Justin 
Winsor, Joseph White, Boston; Prof. Runkie, Prof. W. P. Atkinson and Prof. G H. Howison, of the Institute of Technology, Boston; J. Elliot Cabot, 
Brookline, Mass. ; W. C. Collar, Roxbury, Mass. ; D. B. Hagar, Salem, Mass.; Miss A. E. Johnson, Framingham, Mass.; Prof. C. 0. Thompson, Wor¬ 
cester, Mass.; H. F. Harrington, New Bedford, Mass.; A. G. Boyden, Bridgewater, Mass. 

II. HEALTH. Edward Wigglesworth, Jr., M. D., Boston, Chairman; D. F. Lincoln, M. D., 8 Beacon St., Boston, Secretary; James M. Barnard, 
J. S. Blatchford, C. J. Blake, M. D., Edward Cowles, M. D., T. Sterry Hunt, LL.D., R. H. Fitz, M. D., W. W. Morland, M. D., O. F. Wadsworth, 
M. D., Arthur H. Nichols, M. D., Joseph Willard, H. P. Bowditch, M. D., Prof. G. F. H. Markoe, J. J. Putnam, M. D., C. G. Putnam, M. D., J. 
R. Chadwick, M. D., Boston. Associate Members. C. R. Agnew, M. D., New York; Prof. Francis Bacon, M. D., New Haven, Conn.; J. Fos¬ 
ter Jenkins, M. D., Yonkers, N. Y. ; Alfred L. Carroll, M. D., New York; Frederick Winsor, M. D., Winchester, Mass. ; Franklin Bonney, M. D., 
Hadley, Mass. 

III. FINANCE. D. A. Wells, Norwich, Ct., Chairman; John M. Forbes, Boston; Gamaliel Bradford, Boston; George Walker, New York. 
Prof, W. G. Sumner, New Haven, Secretary. 

IV. JURISPRUDENCE. Hon. John Wells, Boston, Chairman; J. B. Thayer, Boston, Secretary. Emory Washburn, LL D., Prof. Torrey, 
LL.D., Cambridge, Mass.; F. V. Balch, George Putnam, Jr., Moorfield Storey, D. E Ware, O. W. Holmes, Jr., W. A. Field, Boston. 

V. SOCIAL ECONOMY. Prof. W. B. Rogers, Chairman; Dr. S. G. Howe, Mrs. S* Parkman, Mrs. Henry Whitmaa, John Ayres, 
Esq., Miss Lucy EiiU, George S. Hale, Esq., Boston; Charles F. Coffin, Esq., Richmond, Ind.; Dr. Robert T. Davis, Fall Rivtr, Mass.; Charles L. 
Brace, Esq., New York; F. B. Sanborn, Concord, Mass., Secretary. 







FINANCIAL RECORD. 

“WE NEED ONE THING BESIDES MORE MONEY, AND THAT IS BETTER MONEY ."-Senator Zach. Chandler. 


VOL. I. FRIDAY, MAY 1, 1874. NO. 13. 


The Financial Record will be continued until further no¬ 
tice, and will be sent free of postage, to all persons who will re¬ 
mit 50 cents to the publishers. All editors who receive it are 
invited to send their papers in exchange. It will be no longer 
ublished by the American Social Science Association, 
ut for the present, as heretofore, communications respecting it 
may be addressed to the Secretary of the Association, F. B. San¬ 
born, No. 5 Pemberton Square, (Room 21,) Boston ; and all ex¬ 
change papers,public documents, etc., may be forwarded to the 
same address. 


The Spirit of Congress. 

The inflationists were evidently thunderstruck by 
the veto. Their indignation found vent in debates on 
other subjects. Mr. Beck, of Kentucky, on Friday 
charged the Comptroller of the Currency with having 
deceived the President as to the $4,009,000 of national 
bank circulation not taken up; but the next day be 
retracted the charge. 

The unexpectedness of the veto appears in other 
ways. Preparations had been made for a great “work¬ 
ingmen’s” parade in Indianapolis, to show the feeling in 
favor of inflation. The affair had gone so far that it 
could not be given up ; but was suddenly turned into 
an indignation meeting, and there were speeches, reso¬ 
lutions and transparencies, that must have worried the 
loyal Senator Morton very much. Just before the veto, 
General Butler was called to Massachusetts on his own 
business, and the occasion was seized (probably at bis 
own suggestion), to invite him to deliver an address in 
the Boston Music Hall, on the currency. The hall was 
engaged and all the preparations were made,—when 
suddenly the veto was announced ! If General Butler 
intended to start an inflation campaign in New Eng¬ 
land, he has thought better of it; he does not quarrel 
with the powers that be. So the proposed meeting was 
given up. Soon after the veto, it was fully determined 
by the inflationists to issue an address to the people 
taking issue with the President; and there is reason t<v 
believe that the address was prepared. There is much 
talk of some compromise measure, which may take 
form before our next issue. 

On Tuesday the vetoed bill was taken up in the Sen¬ 
ate. The inflationists were anxious to have no debate 
on the merits of the bill, which failed to pass, not ob¬ 
taining the necessary two-thirds. The vote in detail 
was as follows: 

Yeas—Messrs. Allison, Bogy, Boreraan, Cameron, Carpenter, 
Clayton, Conover, Dennis, Dorsey, Ferry of Michigan, Gold- 
thwaite, Gordon, Harvey, Hitchcock. Ingalls, Johnston, Lewis, 
Logan, MeCreery, Merrimon, Mitchell, Norwood, Oglesby, 
Patterson, Pease, Pratt, Ramsey, Kobertson, Spencer, Sprague, 
Tipton, West, Windom, and W right—34. 

Nays—Messrs. Anthony, Bayard, Boutwell, Buckingham, 
Chandler, Conkling, Cragin, Davis, Edmunds, Fenton, Ferry 
of Conn, cticut, Flanagan, Frelinghuvsen, Gilbert, Hogan, 
Hamilton of Maryland, Hamilton of Texas, Hamlin, Howe, 
Jones, Kelley, Morrill of Vermont, Sargent, Scott, Shennan, 
Stevenson, Stewart, Stockton, Thurman and Wadleigh—30. 

The pairs were Messrs. Morton and Ransom for the 
bill, with Messrs. Morrill, (Maine,) and Schurz against 
it. The absentees not paired were Messrs. Alcorn and 
Brownlow for the bill, and Messrs. Cooper and Sauls- 
bury against it. The new Senator from Massachusetts, 
Mr. Washburn, had not taken his seat. Had he also 
been present the full vote of the Senate would have 
been 38 to 35. Not one vote was changed by the veto, 
and the division was exactly in accordance with that 
published in the last number of the Financial Record, 
except that Mr. Gilbert, of Florida, whom we inadvert¬ 
ently classed with the inflationists, is really against 
them. _ _ _ 

The Response to the Veto. 

We print below the veto message and some com¬ 
mends thereon by newspapers of all sections of the 
country. From careful reading of many other articles, 
for which we have no room, we can classify opinion on 
this question as follows ; (1.) The newspapers that are 
opposed to all inflation, which, with one exception, ap¬ 
plaud the veto as a wise act; the exception being a 
Washington paper, which has convictions against infla¬ 
tion, but is sorry to see Senators Morton, Logan, Cam¬ 
eron and Carpenter defeated; (2.) A certain number 


of inflationist papers, also, are “glad of it;” this class 
being sub-divided into two groups,—those who nev¬ 
er have seen, and never will see anything to complain 
of in a Republican President, and those who, having 
supported the vetoed bill, now declare that they were 
never satisfied with it, because it did not inflate enough, 
—in other words, those who are always with the ma¬ 
jority and those who do not care for sour grapes; (3.) 
Republican inflation journals, still wedded to their 
error, which treat the subject more in sorrow than in 
anger; (4.) Democratic inflation papers West and South 
indignant and vituperative; they care nothing for the 
President, and. the veto gives them an opportunity to 
bewail the rapidity with which the administration is 
ruining the country. 

One gratifying negative sign of the times is that opin¬ 
ion against the mad schemes of the inflationists is con¬ 
solidated. We now see noue of the timid, hedging spir¬ 
it so manifest in some quarters after the bill had gone 
to the President. His courage has stiffened many a 
weak-kneed brother, and put vigor into many a hesita¬ 
ting pen. Hereafter, in any discussion upon new prop¬ 
ositions, the hard money party can be confident of good 
support from writers who lately dared not say all they 
had in mind. 

It is also satisfactory to see that the more reasonable 
of the inflationists have lost hope. They know that 
while the present Presidential term lasts they can have 
no increase of irredeemable paper, and they are, there¬ 
fore, ready to take what they can to ameliorate the sit¬ 
uation in other ways. They appear to be really will¬ 
ing to see a contraction of legal tenders if bank facili¬ 
ties can be increased. They are represented as con¬ 
senting to a restoration of the convertibility of green¬ 
backs into gold-bonds. Of court.' ’hey will try to get 
terms as near as possible to suit themselves, but they 
will be too wise to ask more than the President can 
consistently grant them. They will not run the risk of 
another veto. Inflation schemes are not dead, of course; 
but all can now see that the popular feeling in that di¬ 
rection has been greatly exaggerated, and members of 
Congress will be more moderate in their assertions of 
the excitement prevailing among their consti tuents. In 
this respect the veto has been as good as a victory in 
the Senate and House. 

The Currency Veto. 

We print below the full text of President Grant’s 
veto message,—the greatest State paper of his Adminis¬ 
tration, which we trust our readers will preserve for 
future reference, in the debates which are to come. We 
do not agree with all its positions, but it has made fur¬ 
ther inflation impossible, and paved the way for gradu¬ 
al resumption. 

Herewith I return Senate bill No. 617, entitled, “An 
act to fix the amount of United States notes and the 
circulation of national banks, and for other purposes,” 
without my approval. In doing so, I must express my 
regret at not being able to give my assent to a measure 
which has received the sanction of a majority of the 
legislators chosen by the people to make laws for their 
guidance, and I have studiously sought to find sufficient 
arguments to justify such assent, but unsuccessfully. 
Practically, it is a question whether the measure under 
discussion would give an additional dollar to the irre¬ 
deemable paper currency of the country or not, and 
whether by requiring three-fourths of the reserve to be 
retained by the banks and prohibiting interest to be re¬ 
ceived on the balance, it might not prove a contraction; 
but the fact cannot be concealed that, theoretically, 
the bill increases the paper circulation one hundred 
millions of dollars, less only the amount of reserves re¬ 
strained from circulation by the provision of the second 
section. The measure has been supported on the the¬ 
ory that it would give increased circulation. It is a 
fair inference, therefore, that if in practice the measure 
should fail to create the abundance of circulation ex¬ 
pected of it, the friends of the measure, particularly 
those out of Congress, would clamor for such inflation 
as would give the expected relief. 

The theory in my belief was a departure from true 


principles of finance, natural interest, national obliga¬ 
tions to creditors, Congressional promises, party pledges 
on the part of both political parties, and of personal 
views and promises made by me in every annual mes¬ 
sage sent to Congress, and in each inaugural address. 
In my annual message to Congress in December, 1869, 
the following passages appear : “Among the evils grow¬ 
ing out of the rebellion and not yet referred to, is that 
of an irredeemable currency. It is an evil which I 
hope will receive your most earnest attention. It is a 
duty, and one of the highest duties of Government to 
secure to the citizen a medium of exchange of fixed, 
unvarying value. This implies a return to a specie 
basis, and no substitute for it can be devised. It should 
be commenced now, and reached at the earliest practi¬ 
cable moment, consistent with a fair regard to the in¬ 
terest of the debtor class. Immediate resumption, if 
practicable, would not be desirable. It would compel 
the debtor class to pay beyond their contracts, the pre¬ 
mium on gold at the date of their purchase, and would 
bring bankruptcy and ruin to thousands. Fluctuation 
however, in the paper value of the measure of all val¬ 
ues, gold, is detrimental to the interests of trade. It 
makes the man of business an involuntary gambler, for 
in all sales where future payment is to be made, both 
parties speculate as to what will be the value of the 
currency to be paid and received. I earnestly recom¬ 
mend to you, then, such legislation as will insure a grad¬ 
ual return to specie payments and put an immediate 
stop to fluctuations in the value of currency.” I still 
adhere to the views then expre sed. As early as De¬ 
cember 4, 1865, the House of Representatives passed a 
resolution, by a vote of 144 yeas to 6 nays, concurring 
in the views of the Secretary of the Treasury in rela¬ 
tion to the necessity of a contraction of the currency, 
with a view to as early a resumption of specie pay¬ 
ments as the business interests of the country will 
permit, and pledging co-operative action to this end as 
speedily as possible. The first act passed by the Forty- 
first Congress, on the 18th day of March, 1869, was as 
follows: 

“An act to strengthen the public credit of the United States. 
Be it enacted, etc. That in order to remove any doubt as to the 
purpose of the Government to discharge all its obligations to the 
public creditors, and to settle cor ] ; it questions and interpre¬ 

tations of the law by virtue of which such obligations have been 
contracted, it is hereby provided and declared that the faith of 
the United States is solemnly pledged to the payment in coin, 
or its equivalent, of all the obligations of the United States, and 
of all the interest-bearing obligations, except in cases where the 
law authorizing the issue of any such obligations has expressly 
provided that the same may be’paid in lawful money, or in other 
currency than gold and silver, but none of the said interest- 
bearing obligations not already due, shall be redeemed or paid 
before maturity, unless at such tiroes as the United States 
notes shall be convertible into coin at the option of the 
holder, or unless at such time bonds of the United States bear¬ 
ing a lower rate of interest than the bonds to be redeemed, can 
be sold at par in coin. And the United States also solemnly 
pledges its faith to make provision, at the earliest practicable 
period for the redemption of the United States notes In coin.” 

This act still remains as a continuing pledge of the 
faith of the United States to make provision at the ear¬ 
liest practicable moment for the redemption of the 
United States notes in coin. A declaration contained 
in the act of June 30, 1864, created an obligation that 
the total amount of United States notes issued or to he 
issued, should never exceed four hundred millions of 
dollars. The amount in actual circulation was actually 
reduced to three hundred and fifty-six millions of dol¬ 
lars, at which point Congress passed the act of Feb¬ 
ruary 4, 1868, suspending the further reduction of the 
currency. The forty-four millions have ever been re¬ 
garded as a reserve, to be used only in case of emergen¬ 
cy, such as occurred on several occasions, and must 
occur when from any cause revenues suddenly fall be¬ 
low expenditures; and such a reserve is necessary be¬ 
cause the fractional currency, amounting to fifty mil¬ 
lions is redeemable in legal tenders on call. 

It may be said that such a return of fractional cur¬ 
rency for redemption is impossible. But let steps be 
taken for a return to a specie basis, and it will be found 
that silver will take the place of fractional currency as 
rapidly as it can be supplied. When the premium on 
gold reaches a sufficiently low point with the amount of 
United States notes to be issued, permanently fixed 
within propei; limits, and the Treasury is so strengthened 
as to be able to redeem them in coin on demand, it will 
then be safe to inaugurate a system of free banking, 
with such provisions as to make compulsory redemp¬ 
tion of the circulating notes of the banks in coin or in 
United States notes, themselves redeemable and made 
equivalent to coin. As a measure preparatory to free 
banking, or for placing the Government in a position 
to redeem its notes in coin at the earliest practicable 
moment, the revenues of the country should be in¬ 
creased so as to pay current expenses, provide for the 
sinking fund required by law, and also a surplus to be 
retained in the Treasury in gold. 






















34 


THE FINANCIAL EECOED. 


I am not a believer in any artificial method of making 
paper money equal to coin, when the coin is not owned 
or held ready to redeem the promises to pay, for paper 
money is nothing more than promises to pay, and is val¬ 
uable exactly in proportion to the amount of coin that 
it can be converted into. While coin is not used as a 
circulating medium, or the currency of the country is 
not convertible into it at par, it becomes an article of 
commerce as much as any other product. 

The surplus will seek a foreign market, as will any 
other surplus. The balance of trade has nothing to do 
with the question. Duties on imports being required 
in coin, create a limited demand for gold. About 
enough to satisfy that demand remains in the country, 
and to increase this supply I see no way open but by 
the Government hoarding, through the means above 
given, and possibly by requiring the national banks to 
aid. 

It is claimed by the advocates of the measure re¬ 
turned that there is an unequal distribution of the bank¬ 
ing capital of the country. I was disposed to give great 
weight to this view of the question at first, but on re¬ 
flection, it will be remembered that there still remain 
four millions of dollars of authorized note circulation as¬ 
signed to States having less than their quota, not yet 
taken. 

In addition to this, the States having less than their 
quota of bank circulation, have the option of twenty- 
five millions more, to be taken from those States hav¬ 
ing more than their proportion. When this is all taken 
up, or when specie payments are fully restored, or are 
in rapid progress of restoration, will be the time to con¬ 
sider the question of more currency. 

U. S. Grant. 

Executive Mansion, April, 22, 1874. 


The Press on the Veto. 

THE NORTH WESTERN PRESS. 

[Minneapolis Tribune.] 

This veto is not likely to cause any particular dis¬ 
satisfaction in Congress, where the bill was under dis¬ 
cussion five months, there being as many different 
opinions regarding it as there are members. The 
measure only passed at last as a compromise, and be¬ 
cause Congress was disgusted with the protracted de¬ 
bate. 

[Dubuque (Iowa) Times.] 

The veto of the Currency Bill by the President has 
created more excitement at the national Capital than 
it is likely to do throughout the country. Men of all 
parties and of all professions, here in the West, are 
divided in opinion not only upon the best means of 
reaching a fuller and more flexible currency, but also 
upon the need of any inflation. This divergence is too 
general to admit of any strong excitement, or any deep 
feeling, as the result of the President’s veto. 

[Chicago Tribune.] 

This message is calculated to have a beneficial efiect 
upon the business of the country. It practically pre¬ 
vents inflation for three years to come. It therefore 
gives that lease of stability to the national finances. It 
will emancipate the capital that has been virtually 
locked up since last fall, afraid to venture into new en¬ 
terprises while the action of the Government was un 
certain. It will give stability to all branches of busi 
ness ; give fixed values to real estate and all other com¬ 
modities ; and generally restore commerce and trade of 
all kinds to a more healthful condition than they have 
been in since the panic of last September. 

[Indianapolis Journal.] 

In whatever may be said in opposition to the Presi¬ 
dent’s veto of the Senate bill by the friends of an ad¬ 
justable currency, it should be understood that there is 
little grief for the measure perse. It was a mooted ques¬ 
tion whether in operation it would not really contract 
the volume of the circulating medium, while it possess¬ 
ed none of the elements of elasticity for which the peo¬ 
ple of the South and West have so earnestly petitioned. 
The strictures upon the President’s action are confined 
exclusively to the fact that his veto indicates an utter 
absence of sympathy with the growing sections of the 
country, and a devotion to the moneyed and banking 
interests of the East at the expense of the active, labor¬ 
ing millions. 

[Milwaukee Wisconsin.] 

Every business interest throughout the country will 
be a gainer by the veto, and the fact that in all the 
monetary centers the veto has not created the least dis¬ 
turbance, is a good sign. It has tranquilized the pub¬ 
lic mind, inasmuch as its sentiments are a guarantee 
against violent financial legislation of any kind, while 
its wise and comprehensive views on the true theories 
of finance, will not only tend to promote confidence be¬ 
tween man and man in this country, but will also tend 
still farther to assure foreign capitalists that they can 
now send their money here to build our railroads, with¬ 
out the apprehension of being swindled by debasement 
of the currency. 

[St. Louis Republican.] 

Whatever may have been the motives which dictated 
the Presidential veto, the consequences thereof cannot 
be otherwise than eminently beneficial in the long run. 
The evils arising therefrom are temporary—the good is 
permanent. We are nearly down to that financial 


“hard-pan” which is the only foundation of solid and 
lasting prosperity. The defeat of inflation compels us 
to go down to the very bottom, but we can go down 
slowly, cautiously and safely, and when once there we 
may begin to build the structure which no hurricane of 
panic, no earthquake of crisis will ever utterly destroy. 

[St. Louis Globe.] 

President Grant has no mercy upon enemies of the 
national honor. His veto is the strongest and most 
stinging rebuke that a President has ever given to the 
faithless pledge-breakers of his own party. Butler and 
Morton will not like it; their impecunious and hungry 
satellites who clamor for “more money” will feel unhap¬ 
py ; but the great body of Republicans will be awaken¬ 
ed by this veto to a full realization of the duty which 
they owe to the country and to their party. 

[Chicago Journal.] 

The President’s veto means a stoppage of the shin- 
plaster factory; it means the adoption of a financial 
policy that will look to the redemption of our national 
pledges, a gradual return to real money as the popular 
medium of exchange, a restoration of confidence, at 
home and abroad, in our Government’s promises to pay, 
and with it the appreciation of our national credit and 
bonds. 

[The Inter-Ocean.] 

The more closely the veto message is scanned, es¬ 
pecially in relation to former messages of the Presi¬ 
dent, and particularly that of last December, the more 
incomprehensible does it appear. 

[Cleveland <0.) Herald.] 

It is safe to say that the best sentiment of the coun¬ 
try will warmly approve this action of the President, 
which has been taken in opposition to extraordinary 
pressure from all parts of the country and against the 
protests of some of his warmest friends and supporters. 

[Chicago Times.] 

Grant travels a road that is never level. At one time 
he disappears into a hollow, and occasionally he einer 
ges and ascends, and crosses a conspicuous hight. 
For a time he is lost in the dip of his route ; and then, 
at intervals, he suddenly appears upon some lofty emi¬ 
nence, and is seen and recognized by the whole world. 
For a long, long time Grant has been down in one of 
the hollows of his career. He disappeared from the 
view of decent men. Nobody thought of him, save 
with contempt. Nobody knew or cared much whether 
he should ever again come to the surface. As usual, 
he has emerged at the precise moment when everybody 
had given him up as lost. As usual, he has climbed the 
highest at the very instant when he was at the most 
profound depression in his uneven route. The chances 
are that he will proceed to climb down at once from the 
dazzling hights of veto and democracy, in order to re¬ 
sume his usual course in the mire of radicalism. Never¬ 
theless, for this brief view of him, all good men will thank 
him, and will most sincerely regret that his tastes, or 
his destiny, or his political associations, will not per¬ 
mit him to remain with us longer. Vale, Ulysses ! and 
may you come again when you shall' be as badly need¬ 
ed as you were on last Wednesday. 

THE GERMAN PRESS. 

(St. Louis Westliche Post.) 

The President has done his duty. Mr. Grant has 
vetoed the disgraceful inflation bill. This is as it ought 
to be, and settles the question. For if Morton-But- 
lerism had a hard fight to push the bill through origi¬ 
nally, they will now have to abandon all hopes of suc¬ 
cess. With the chief of their party in opposition they 
are utterly powerless. Their former adherents will 
now desert them in numbers; and desertion, indeed, 
will now be for some time the order of the day in Wash¬ 
ington. 

(St. Louis Anzeiger ) 

The veto came as unexpected as it is welcome. Un¬ 
expected, not because the President has thereby chang¬ 
ed his former position. On the contrary, the veto is 
in agreement with all the former expressions and dec¬ 
larations of the President, and the promises of all the 
parties in the country. But disappointed again and 
again by a series of bitter experiences, the people had 
only too good a reason to expect the worst from the 
President also on this question. Was not and is not 
Butler still his most intimate adviser 1 

(St. Louis Amerika.) 

Grant’s veto message contains hard common sense. 
The President makes himself only the exponent of an 
enlightened public opinion. He only repeats what we 
and other sensible men have said innumerable times. 
He simplv remembers what he ought to do as the chief 
official of a nation which did not make him its head in 
order that he should put an official seal on its dishonor. 
In one word, President Grant has accepted reason and 
good council, and for that we thank him, as American 
citizens and Republicans, with the same candor which 
has dictated our open criticism of his less praiseworthy 
measure. 

THE SOUTHERN PRESS. 

(Richmond Whig.) 

What may be the effect of the veto upon Congress 
we will not undertake to predict; to attempt to over¬ 
ride the veto would be a vain thing, it cannot be done 
—it is a contest, of wealth against the necessitous, and 
money in power; aj r e, for years has been all powerful 
in the the Federal Capital. The effect of the failure, 


however, to hearken to the nearly united utterance of 
the South and West upon the fortunes of parties and 
individuals in less difficult of solution. The voice of 
the South once more united upon such an issue will 
again become potential. With shield joined with shield 
they will keep step with the mighty and evergrowing 
West, and brush from their pathway as but cobwebs 
men and parties who dare to impede their progress to 
wealth and power. 

Norflolk (Va.) Landmark.] 

We trust that events may vindicate the wisdom of 
the President and his advisers, and hope that now this 
great queston has been decided business will resume its 
ordinary flow. His Excellency is congratulated by the 
Herald on his tact in doing the right thing at the right 
time; but as we read events, he first outraged and insult¬ 
ed the leaders of opinion in Boston and New York, and 
then inflicted an incurable wound on the vanity of Mor¬ 
ton, and his followers from the West. When the sub¬ 
ject is brought under discussion we shall see more plain¬ 
ly the political effect of this measure, which, in our 
opinion, promises to be far-reaching and profound in its 
influence on our Ckesar and his fortunes. 

[Savannah Republican.] 

The announcement will be received with more or less 
surprise, as all previous indications pointed to its ap¬ 
proval. In New York and other money centres the 
tidings were received with unfeigned satisfaction. 
What the result will be as affecting the general business 
of the country remains to be seen, but that it wil mili¬ 
tate disastrously against the South is generally con¬ 
ceded. 

[Richmond Enquirer.] 

The President, by his veto, has pleased the monopo¬ 
lists of the great money markets of the North ; but he 
lias given a staggering blow to the active and vital in¬ 
terests of the advancing men of the West and South. 
His view of the great question is too narrow. He 
knows too little of the struggles of the werking men 
[Petersburgh (Va.) Index.] 

Our neighbor, the JS/ews, states our position correctly, 
but does not state it fully, when it says we approved 
President Grant’s veto of the inflation bill as having 
been “well and wisely” done. The bill he has vetoed 
could not now have met any of the purposes for which 
it was intended. If the South and West, now thor¬ 
oughly united in feeling, interests, policy and purpose, 
resolve to force inflation on a much larger eeale, to 
compass more aspiring and daring financial ends 
that apply to their own sections especially, they can 
arrange to do so in the coming campaign for members 
of Congress, and can send to that body the men whose 
votes and voices will enforce their determined purpose. 
[Richmond State Journal.] 

But we are not so much grieved as some of our 
friends seem to be. The veto will attract the atten¬ 
tion of Congress and the country to the vital and all- 
embracing question of finance with redoubled force. 
The views of the President are fully and clearly stated, 
and are in the main in full agreement with those which 
we in common with the great body of currency re¬ 
formers hold: “First make the money good, then call for 
more." This is just what we ought to do. The vetoed 
bill, as we explained last week, is defective, in that it 
failed to make the currency better. 

[Wilmington (N. C.,) Journal.] 

What special inducement has led to this change of 
front on the part of President Grand we know not. 
Unfortunately for his good name he does not enjoy 
the reputation of being uninfluenced in his actions by 
pecuniary or other valuable considerations, and much, 
doubtless, will be said in this regard hi accounting for 
the veto. But it is by no means a necessary conclu¬ 
sion that the veto was bought and paid for. President 
Grant and the party he represents have, since the war 
ended, been subservient to the money interest of the 
country. The people of the West have discovered 
that like their natural allies, the people of the South, 
they have all along been hewers of wood and drawers 
of waters to their money masters of the Middle and 
New England States. They have learned that there is 
a door ot escape for them that can and will be opened 
by the aid of the South. Congress is already in their 
power. The only obstacle in their way to immediate 
relief is the President of the United States. 

THE BORDER STATE PRESS. 

[Wilmington (Del.) Commercial.] 

The Middle and Eastern States are inaccurately said 
to be the only sections supporting the veto. This is 
not the case. The Pacific coast States, including Cali¬ 
fornia, Oregon, and Nevada, are for hard money. Tex¬ 
as, too, is largely of the same mind, and both of Ohio’s 
Senators united against, the issue of more irredeemable 
paper money. So. also, of Delaware. We used to be 
classified as a “Middle” State, but in fact the later des¬ 
ignation of “Border” State is more in accordance with 
our situation and characteristics, which are almost iden¬ 
tical with those of Maryland and Kentucky* upon all 
political and social questions. Delaware stands with 
the sound money anti-inflation column, and, so far as 
our observation goes, her people are almost unanimous 
in approval of the President’s decisive act. Even far, 
ther South, Maryland may be said to take the same 
stand, so that, upon such a summing up, it appears 













THE FINANCIAL RECORD. 


35 


that from Maine southward to the Potomac and west¬ 
ward to the Indiana line, there is substantial unanimity 
in opposition to the policy of inflation, while Texas, in 
the extreme South, and the Pacific States, away in the 
sun-set, join them as allies. 

[Cincinnati Gazette.] 

With the exception of four papers, all that were re¬ 
ceived at this office yesterday, and that had anything 
to say about the message, commended the veto. A 
number had apparently not recovered from the surprise 
into which they were thrown, and had no views to pre¬ 
sent. But by far the large majority indorse the action 
of the President; with enthusiasm. The unanimity and 
the enthusiasm of the papers in support of the message 
is very significant. Congressmen that are talking about 
appealing to the districts will do well to wait a few 
days. 

[Washington Republican.] 

The veto has recalled Congress to the chart of the 
party on the question of resumption of specie payments. 
The clearness and precision of the statements ot the 
message leave no room for doubts as to the course 
which it is the duty of the Republican majority in Con¬ 
gress to pursue in order to redeem the pledges which 
have repeatedly been given to the public by the party 
in conventions, by the President in his messages and 
by Congress in its acts and resolutions. That both 
parties are pledged to provide for the redemption of 
United States notes in gold at the earliest possible mo¬ 
ment no one will pretend to deny. That any increase 
of the volume of paper currency uncoupled by such 
provision for redemption will serve to put farther away 
the day of specie payments is as clear as the day. 

[Louisville Courier-Journal.] 

The fundamental theory of the message is above crit¬ 
icism. No wealth is created, no wealth is brought into 
the country by printing and circulating additional is¬ 
sues of inconvertible currency. We believe, too, that 
this is a truth which would be indorsed by an over¬ 
whelming vote to-morrow if the question were submit¬ 
ted to the suffrage of the people. We believe that the 
farmers, artisans and laborers of the West and South, 
as well as the solid merchants, bankers and railroad 
men, would as forcibly condemn the wretched financial 
heresy of inflation as the rank and file of the popula¬ 
tion of the East. 

[Louis ville.Com mercial. ] 

The veto will meet the approval of the sober second 
thought of even those who were inclined to favor an 
expansion of the currency. To those who believed that 
the increase of our irredeemable paper currency was 
one of the greatest evils that could befall the country, 
it will be most welcome. It can not be questioned that 
the President stands upon true Republican principles. 

[Cincinnati Commercial.] 

Here we have a substantial breakwater against the 
mad recklessness and the mistaken zeal of the popular 
branch of Congress. That earnest appeals from lead¬ 
ing business men, and steady, oft-repeated protests by 
the influential newspapers of the country have fortified 
and strengthened that breakwater, there can be no 
doubt. In this there has happily come an encouraging 
reward to good work. 

[Cincinnati Enquirer.] 

The President’s veto completes the disruption of the 
Republican party. Though a Western man, he has 
proved treacherous to the interests of his section. 
Though pre-eminently a candidate of the people, never 
having commanded even the respect of men of both 
culture and honesty, he has thwarted the will of the 
people. Proclaiming, on entering the White House, 
that he would have no policy to enforce against the 
will of the people, he has violated that pledge with the 
most obvious shamelessness. He has shown himself to 
be a tool of the money-sharks. 

[Baltimore American.] 

The veto of the inflation bill has given to President 
Grant a new hold on the confidence of the people. If 
the press represents the popular sentiment, we might 
almost feel warranted in asserting that there is next to 
nobody who sustains the inflation project so persist¬ 
ently demanded by Messrs. Morton, Butler & Co. 
Nearly all the leading press of the West, with the ex¬ 
ception of a few papers in Cincinnati and Chicago, 
principally Democratic, are enthusiastic in their ap¬ 
probation, and compliment the President for his timely 
action in preserving the honor and credit of the coun¬ 
try. 

[Baltimore Gazette.] 

The President, if the contest be prolonged, must 
come out again the victor. Public men, situated as 
Morton and Butler— least of all—Butler—cannot af 
ford to quarrel with a President with two years of 
power before him. Where would Morton be in Indi¬ 
ana without Executive backing? With it, he failed at 
the last Governor’s election. Butler, sole Yankee in¬ 
flationist, would be in worse plight still. 

THE EASTERN PRESS. 

[Philadelphia Press.] 

We shall not be blamed if we base our supreme hope 
of relief from the government upon the tact that Presi¬ 
dent Grant simplv forgot himself when he vetoed the 
Senate finance bill. 

[Newark Advertiser.] 

Politically, the effect of the veto upon party organi¬ 


zations cannot be so serious as to result in any gener¬ 
al disruption. The message of the President recites 
his own previous utterances in annual messages and 
the platforms of both parties, which are substantially 
the same as regards inflation and the opposite policy 
of a return to specie payments at the earliest possible 
day. Thus entrenched, the President cannot be ac¬ 
cused of any violation of the theories of the party that 
elected him. 

[N. Y. Commercial Advertiser.] 

Commendation of the President’s veto comes from 
many besides those who opposed the measure which 
he has disapproved. Some there are who have favored 
inflation because they were led to believe that the Presi¬ 
dent favored it; and others, who advocated expan¬ 
sion, on what they regarded as principle, are gratified 
with the boldness and honesty of the President and his 
consistency with former declarations. 

[Pottsville. Penn., Miners’ Journal.] 

When the veto message was announced to the House 
of Representatives at Harrisburg, it was received with 
mingled cheers and hisses, about equally divided. The 
Democratic politicians, who generally seem to have 
united with the money-changers against the producing 
classes, expect to profit by the veto message of Gener¬ 
al Grant. They will, however, be greatly disappointed 
—where they wifi gain one money-changer they will 
lose ten of the rank and file, whose lot is cast with the 

producers of the country.By prompt action you 

can elect a Congress next fall that will give the people 
a sufficient volume of currency over the head of the 
President. If a majority of the old fogies in the Sen¬ 
ate would dare to defeat a bill which the people will 
demand, after the question has been submitted to them, 
the only way will be to demand their resignation, and 
if they will not resign, do as Cromwell did to the Rump 
Parliament—turn them out of the Senate Chamber. 

[New York Express.] 

Western Republicans who condemn the President 
for his veto, will do as well to remember two or three 
important facts—first, that he is a Western man him¬ 
self; secondly, that his veto is consistent with his Mes¬ 
sages to Congress, and that he could not do otherwise 
and be consistent either with conscience, honor, or 
good faith. He stood before the country before his re- 
election pledged against inflation, and the belief that 
he would be firm on this question, contributed largely 
to the result. Thirdly, the veto is in the best interests 
of the country, and as we think, every part of it, from 
men of capital in business, to the day laborer living 
upon his daily pay. And, fourthly, the veto is calculat¬ 
ed to increase the credit of the country abroad. 

[Buffalo Expresf.] 

Grant lias proved himseif equal to the emergency. 
He has vetoed the Financial Bill and thereby demon¬ 
strated a steadiness of purpose in adhering to his 
previously announced policy of a speedy return to 
specie payments, that will go far towards restoring 
confidence in financial circles. The veto establishes 
the welcome fact that no inflation measure can become 
a law during the life of the present Congress ; for the 
advocates of that policy do not possese sufficient 
strength to pass a bill over the opposition of the Ex¬ 
ecutive. 

[Boston Post.] 

The Democratic party will never commit the folly 
of disorganization because the President elected by the 
other party has found it necessary to throw his will 
across its path in order even to save himself. The de¬ 
spatch to the Sunday Herald, which undoubtedly fair¬ 
ly represents the true state of the case, shows that the 
Wisconsin Republican members of Congress are appre¬ 
hensive tiiat they may not have the naming of the 
next Senator at all, and, in consequence, are softening 
their expressions of disappointment over the Presi¬ 
dent’s veto considerably, and the Democrats and hard 
money men will, very likely, he asked to take in hand 
the interests of the people at tire next election, Gen. 
Schenck denies inflation to be the preference of the 
people of Ohio, and the business centers of the West 
and Southwest seem to have the same story to tell. 

[Boston Advertiser.] 

The premiums on gold yesterday declined to twelve 
and three eights per centum. The premium on 
Wednesday morning was thirteen and three-quarters 
per cent. The difference adds to the gold value of our 
currency over seven millions, eight hundred and ten thousand 
dollars. " Every paper dollar yesterday was worth over 
a cent more than the day before the veto. 

[New York Herald.] 

Senator Thurman could not conceal his great sur¬ 
prise and rejoicing, as he walked over to the seat of 
Senator Scott to speak to him sotto voce. His usually 
grave, judicial face was wreathed in smiles. He ap¬ 
peared for the time-being the happiest man in the Sen¬ 
ate. He subsequently joined Senators Edmunds and 
Conkling near the Speaker’s desk, and the two pro¬ 
spective nominees for the Presidency on opposite sides 
joined in with the logical Vermonter in hearty rolls of 
laughter and the shaking of their adipose tissue in un¬ 
restrained merriment. 

[Philadelphia Ledger.] 

The President sought so diligently for some way by 
which he could give the bill ins approval, aud yet, at 
the same time, keep the governmen t in the line of good 


faith towards a return to specie payments, that the 
general opinion was that he would be able to find the 
way and sign the bill with recommendations to Con-'' 
gress for further legislation to cure its defects. But 
the desire to defer to the views of the public men of 
the South and West and the desire to adhere to a sound 
financial policy were incompatible. The two things 
could not be made to agree. Approval of the bill with 
any sort of qualification could not be made to conform 
to the uniform spirit of his previous recommendations ; 
could not be made to harmonize with the formal and 
solemn declarations of the Congress itself; and, higher 
than either, it could not be made consistent with the 
obligations of public faith. 

[The Brooklyn Union.] 

The real significance of the President’s action lies in 
this— that it indicates an anti-inflation policy ; a policy 
of good faith and consistency in the redemption of the 
national promises to pay. 

[The New York Evening Mail.] 

The President's veto will prove an “anchor of the 
soul, both sure and steadfast,” for at least two years 
to come, to all who are engaged in business enterprises. 
And it behooves our merchants and business men every¬ 
where to bear in mind that, during the rest of Presi¬ 
dent Grant’s term of office, there can be no inflation 
nor any practical interference, from Congress or other 
quarters, with the volume of the currency. 

Resumption—The Way to It—Panics. 

[Prom the Letter of an American merchant in Italy.] 

The preparation for return to specie payments ought 

to be slow, regular and sure. Any haste will be apt to 
cause a relapse, and then we should drift along like 
Austria, for a quarter of a century or more. The cur¬ 
rency supplied meanwhile, should not oniy be rising 
gradually in value, but should be of a kind to circulate 
as quickly as possible, thus securing a maximum of ex¬ 
change work in proportion to the amount afloat. 

All paper must be either money or security for in¬ 
vestments. It cannot be made to serve as one to-day 
and the other to morrow, nor can the required elastici¬ 
ty be obtained except by making it exchangeable for 
coin at pleasure. I believe the only possible efficient 
currency in the world now (i.e. with the present rela¬ 
tion between business requiring the transfer of capital 
and the precious metals, as to the amount of each) is a 
paper one based on gold. This includes, taken in the 
largest sense, all flie devices of commerce to use credit 
by bills, notes, checks, &c., but they must be ail brought 
to the one test which can be applied to all, in order to 
avoid confusion and waste of power. 

As regards the talk about the loss by panic and con¬ 
traction, and the possibilities of warding it off by new 
issues of the currency which brought on the inflation 
by its excess,—this seems to me all confused nonsense. 
When the inflation occurs, certain individuals make a 
gain, or suppose they do, by the rise in price of what 
they have to sell. When the contraction comes they, 
or other individuals, lose, or suppose they do, a like 
amount, assuming prices to have returned to their for¬ 
mer level. Now, whether these individuals have really 
gained or lost, or not, depends entirely upon what comes 
after the change. If a farmer sells his crop at the in¬ 
flated price, and with part of the proceeds pays off a 
mortgage on his farm made under the gold standard, 
he gains (at the expense of his creditor) ; but if he buy 
with the surplus railroad shares, which he has to sell 
when the contraction comes, he gains nothing. Mean¬ 
while, under this supposition, the nation neither gains 
nor loses by prices, but inevitabiy loses by waste of 
power. It is in the position of a man who has spent, 
his day in rolling a stone to the top of a Hill, and who 
Ijnds next morning that it has rolled itself down in the 
course of the night. 

Panics must always occur as long as hope is stronger 
than fear in the commercial and banking communities, 
and they are, on the whole, not a bad sign. They oc¬ 
cur most in the most progressive societies and times. 
Where everything is stagnant there are no panics ; and 
this applies not only to financial and commercial affairs, 
but to political and social ones. 

In Bengal the lively prospect of starving by the mil¬ 
lion in two months hardly produces a panic. In Tur¬ 
key the plague is accepted as quietly as a hard frost is 
in New England. 

Debtors and Creditors. 

FROM A NEW TORK MERCHANT’S LETTER TO A MEM¬ 
BER OF CONGRESS. 

It is needless to speak of the intense feeling excited 
here by the proposal to increase the amount of irre¬ 
deemable government paper-money ; and it would be 
out of place for me to urge upon your attention the 
arguments which have been brought forward dm - ing 
the debate. There are, however, some points of a 
practical character which, it seems to me, have not 
been sufficiently insisted on. 

As a mere question of expediency, and of the “re- 









36 


THE FINANCIAL EE CORD. 


lief” which is demanded by so many branches of en- 
^ terprise, we are convinced here that the increase of 
greenbacks is a glaring error. The discredit which it 
casts on our national good faith will be shared by all 
enterprises that need capital, and will far more than 
offset any stimulus that may be hoped from inflation. 
What is the reason that money cannot be borrowed, in 
many parts of the West, even at high rates of interest, 
while here there are vast amounts that cannot find bor¬ 
rowers ? The reason is to be found in the prevailing 
distrust felt by lenders, and this distrust is felt especial¬ 
ly towards Western borrowers, since Western commu¬ 
nities have been repudiating their county and town 
debts, passing agrarian laws to limit the earnings of 
railways, and seeking to obtain an increase of govern¬ 
ment paper money. 

I am perfectly sure that such legislation cannot be i 
permanently sustained by the people. The creditor 
class is numerically altogether larger than the debtor 
class, and (as the subject cannot rest,) they will infal- | 
libly discover that they are swindled by legislation 
which degrades the currency in which they receive 
their wages, and in which they are repaid their depos¬ 
its in the savings banks. The wages-earning class is 
the great creditor class. They give credit to their em¬ 
ployers for a week or a month, and it is they who 
form the largest number of depositors in the savings 
banks. In this State alone, there are more than 800,- 
000 depositors in savings banks—more than .the whole 
number of voters. These same considerations apply 
likewise to the holders of life insurance policies. The 
debtor class is comparatively very small. Only those 
who are reputed to possess property, can obtain credit. 
The vast bulk of all the money owing in this country 
to-day, is owed by great corporations and by great 
“operators.” 


A Dozen Questions 

TO BE ANSWERED BY INFLATIONISTS AND IRREDEEM¬ 
ABLE MONEY MAKERS. 

1. Will not money or currency be better, both at 
home and abroad, if redeemed in coin, rather than in 
property ? 

2. If it would take §50 of irredeemable money, or 
money redeemable in property to buy a bushel of wheat, 
what value would such money have for a circulating 
medium ? 

3. If it took $2 of paper money to buy one gold dol¬ 
lar, how much of the paper money would be redeemed ? 

4. If I owned a note against A, and should sell or 
trade it to B, would that redeem the note ? 

5. How is the Government to pay its bonds and the 
interest on them if not in coin ? 

6. Does not the value of money consist in what you 
can buy with it ? 

7. When we have an irredeemable currency what is 
there to prevent gold going up to 500 per cent premium 
or more ? 

8. If it is not necessary to have gold or silver as a 
standard of value, and if Government can issue irre¬ 
deemable paper money, and everybody would take it, 
and it would be good, why would it not be for the in¬ 
terest of this country to have our Government issue 
hundreds of thousands of millions of this paper money ? 

9. We being the most intelligent people in the world 
why should not we have the best currency ? 

10. Is not gold less liable .to fluctuate in value, and 
does it not have a more certain value as money than 
anything else ? 

11. If you believe that paper money can be issued 
by Government, redeemable in property, who is to fix 
the value of products, when exchanged for this kind of 
currency ? 


The currency question is badly mixed ; I hope our 
tinkers will let well alone, not make times worse than 
they are. The people are fleeced enough already. A 
sound specie basis for our money, an honest Congress 
that are content with their salaries, is what we want 
most, and that we will have sure. O. Perkins. 

Durant, Cedar County, Iowa. 


Humors of Finance. 

“It is clearly the interest of the West and the South,” 
says the confederate repudiationist, “to make every 
bale of cotton and every bushel of wheat bring as many 
paper dollars as possible ; for in paying off a debt, a paper 
dollar which is ‘legal tender’ goes as far as like amount in 
gold.” It is, then, the interest of Western farmers that 
a bushel of corn shall be exchanged for he sum total 
of the national debt; that being the limit suggested by 
the words “as many paper dollars as possible.” Ac¬ 
cording to the Pendleton theory of “enhancing the val¬ 
ue of the greenbacks” by making them par with bonds 
without interest, the meaning of this would be that 
corn should command on the Chicago market about 
§2,500,000,000 per bushel, which perhaps even the 
most avaricious granger will concede to be a tolerable 
liberal price. But what will the granger do with the 
2,500,000,000 paper dollars he has received for his bush¬ 
el of corn, and which must be worth §2,500,000,000 be¬ 
cause it will go as far in paying debts as any sort of 
dollars will? Will he proceed, like “Count Fosco,” to 
pay the national debt ? Probably not. Probably he 
will try to exchange his $2,500,000,000, which rep¬ 
resent the value alike of his bushel of corn and of the 
national debt, to some benevolent shoemaker for a pair 
of boots, by offering to throw in ten or fifteen more 
' bushels of corn to make up the price of the boots ! 


SPECI AL N OTICE. 

1-mcriratt Serial S>mm Issomtion, 

Boston, May 1, 1874. 

The customary General Meeting of the Association will take place this year at New York, from the 19th to the 23d of May. The 
persons engaged to read papers, with their subjects, and the order of business, so far as determined upon, are as follows : 

first session. (Tuesday, May 19, 7.30 p. m.) 

An Address by the President, George William Curtis, Esq. 

A Paper by Cephas Brainekd, Esq., of New York, on The Social Science Work of the Young Men’s Christian Association. 

A Paper on Financial Administration, by Gamaliel Bradford, Esq., of Boston. 

second session. (Wednesday, May 20, 3 p. m.) 

A Paper by Rev. Dr. Woolsey, of New Haven, on The Exemption from Capture of Private Property upon the Sea. 

A Paper by Willard C. Flagg, Esq., of Moro, Ill., on The Farmer’s Movement in the Western States. 

A Paper by President D. C. Gilman, of the University of California, on California and its Relations with the other United States. 

third session. (Wednesday Evening, 8 o’clock.) 

A Paper by D. A. Wells, Esq., on Rational Principles of Taxation. 

A Paper by Prof. Benjamin Peirce, of Cambridge, on Ocean Lanes for Steamship Navigation. 

A Paper by Gardiner G. Hubbard, Esq., of Boston, on American and European Railroads. 

fourth session. (Thursday, May 21, 8 p. m.) 

A Paper by Dr. J. Foster Jenkins, of Yonkers, New York, on Tent Hospitals. 

A Paper by Dr. Alfred L. Carroll, of New York, on Hygiene in Schools and Colleges. 

A Paper by Dr. Albert Day, of Boston, on The History and Results of Inebriate Asylums in America. 

A Report from the Health Department. 

fifth session. (Thursday Evening, 8 o’clock.) 

A Paper by Hon. Charles A, Buckalew, of Bloomsburg, Pa., on The New Pennsylvania Constitution. 

A Report from the Finance Department, by Prof. W. G. Sumner, of New Haven. 

A General Discussion on Financial Questions. 

SIXTH session. (Friday, May 22, 3 p. m .) 

A Report by the General Secretary, F. B. Sanborn, on The Work of Social Science in the United States. 

A Report from the Department of Social Economy, on Pauperism in the City of New York. 

A Paper by Z. R. Brockway, Esq., of Detroit, Mich., on The Reformation of Prisoners. 

seventh session. (Friday Evening, 8 o’clock.) 

A Paper by Hon. Andrew D. White, of Cornell University, on The Relation of National and State Governments to Advanced Education. 

A Paper by William W. Greenough, Esq., of Boston, on Public Libraries. 

A Report from the Department of Education. 

At the First and the last Session the President (Mr. Curtis) will occupy the Chair, Dr. Woolsey will preside at the Second Session, and Mr. D. 
A. Wells at the Fifth Session. The Chairmen at the other Sessions will be announced hereafter. A few persons will be invited to discuss each pa¬ 
per in speeches of ten minutes each. On Wednesday, May 20, at 10 a. m., there will be a Conference of the Boards of Public Charities in the United 
States, and a conference of Boards of Health on Thursday, May 21, at the same hour. It is proposed also to hold a session of the Boards of Health 
and of Public Charities united on Friday, May 22, at 10 a. m. Delegates from the State Boards of Public Charities of New York, Massachusetts, 
Connecticut, Michigan and Wisconsin, have promised their attendance, and it is hoped that all the Boards in the country will be represented, either 
by delegates or by letters. Among the subjects which will be brought before the Conference on Wednesday, for consideration, will be : 

I. The Duty of the States Toward Their Insane Poor. 

II. The Lazos of Pauper Settlement, and the Best Method of Administering Poor Law Relief 

III. The Prevention of Pauperism. 

In connection with this second topic a report from the Jurisprudence Department on The Poor Laws of Massachusetts, will be presented. 

Subjects suggested for the Conference of Thursday are these : 

I. The Proper Organization of Health Boards. 

II. The Powers and Duties Proper to State Boards. 

III. The Powers and Duties of City Boards. 

IY. Vital Registration, and the Proper Use of Vital Statistics. 

It is expected that Dr. Elisha Harris, of the New York City Health Department, will read a paper on the last named topic. 

All the Sessions and the Conferences of the Boards of Health and Public Charities will be held at the Hall of the Young Men’s Christian 
Association, corner of Fourth Avenue and 23d Street. 















FINANCIAL RECORD. 

“WE NEED ONE THING BESIDES MORE MONEY, AND THAT IS BETTER MONEY .”—Senator Zach. Chandler. 


VOL. I. 


FRIDAY, MAY 8, 1874. 


NO. 14. 


The Financial Record will be continued until further no¬ 
tice and will be sent free of postage, to all persons who will re¬ 
mit 50 cents to the publishers. All editors who receive it are 
invited to send their papers in exchange. It will be no longer 
published by the American Social Science Association, 
but for the present, as heretofore, communications respecting it 
may be addressed to the Secretary of the Association, F. B. San¬ 
born, No. 5 Feiuborton Square, (Room 21,) Boston; aud all.ex¬ 
change papers, public documents, etc., may be forwarded to the 
same address. 

National Promises. 

“The United States will fxiy bearer one dollar.” 

United Stales legal tender-note. 

“The gold coins of the United States shall be a one 
dollar piece, which, at the standard weight of twenty- 
five and eight-tenths grains, shall be the unit of 
value.” — Act of Congress, February 12, 1873. 

“The United States solemnly pledges its faith to 
make provision, at the earliest practicable period, for the 
redemption of the United States notes m coin.”—Act 
of March 18, 1874. 

The Spirit of Congress. 

There has been no Congressional discussion of the 
financial question the past week, and the only event of 
interest is the reporting, on Wednesday, of a new bill 
from the Senate Finance Committee. As this propo¬ 
sition will iuevitably be amended before it can be or 
ought to be passed, we give but the briefest synopsis. 
In general it is the House or Maynard bill, with one 
important omission and several equally important ad¬ 
ditions. It establishes absolutely free banking, abolish¬ 
es the reserves of banks against their circulation, and 
requires them to hold all reserve in their own vaults, 
and to retain one-fourth of the coin interest on the U. 
S. bonds. 

This last provision is borrowed from the vetoed Sen¬ 
ate bill. It is apparently intended to provide for a sys¬ 
tem of redemption like that of the Maynard bill, but 
by the omission of these words, “assorted or unassort¬ 
ed,” (unless the telegraphic report is wrong,) the whole 
' is ertbrown and the redemption is made iru- 
p • ~ : ble. It fixes the volume of greenback currency 
at - 5082 . 000 , 000 , which is to be reduced by $-500,000 for 
every SI,000,000 of bank notes issued under this act 
until the maximum is reduced to $§00,000,000. After 
January 1, 1877, legal tender notes will be convertible 
into ten-year five per cent bonds. The notes so con¬ 
verted, may however be re issued either in the purchase 
of other bonds or in the payment of current expenses, 
a provision which completely neutralizes the few good 
features of the bill, which was not reported unanimous¬ 
ly, and is to be opposed by the inflationists. No time 
has yet been fixed for considering it. 


The Situation. 

The inflationists in Congress, having rallied from the 
crushing defeat of the veto, are casting about for a 
new bill which the President might be tempted to sign. 
As yet their success has not been great; their plan,if 
agreed on, has not been revealed. Gen. Butler has 
put in a project, but that does not count. 

The friends of honest money can afford to take coun¬ 
sel together without concealment. They desire one 
thing, namely, a return to the specie standard. There 
is but one way to accomplish it, and that is by a con¬ 
traction, director indirect, of the paper issues. If pub¬ 
lic sentiment is ripe for such a step, it must be allowed 
an opportunity to make itself felt. If it is not ripe, 
means must be taken to make it- ripe. There are 
many ways of doing this, all of which should be adopt¬ 
ed and practised simultaneously. Wherever there is 
a handful of men fighting against the inflationists in 
any neighborhood, they should communicate with some 
central organization, and report the special needs of 
their community. In larger cities leagues might be 
formed on the model of those already established in 
Cincinnati and Boston, if no better can be devised. 
In a word, the advocates of a good currency should act 


together for this one object, and work as oqpasion may 
present itself. The article which we copy from the 
Chicago Times shows exactly what is needed. It is idle 
to hope for any earnest legislation from the present 
Congress in the direction of specie payments. We do 
hope for it in the next Congress. But the hope will be 
vain unless the hard-money men in the sections now 
misrepresented by inflationists, learn to act together 
and to make themselves felt. Now is the time for such 
work; and we make an appeal to all who deem the 
currency question a vital one, to act on that belief and 
organize immediately.. 

As for the compromise measures introduced in Con¬ 
gress or maturing in committees, they are but the de¬ 
vices of politicians to save parties. Compromise on 
this question is impossible. Inflation and contraction 
cannot coalesce, and the ‘growing up” theory is a delu¬ 
sion. Some of the bills already proposed are harmless 
enough, and not worth opposing. But these will not be 
satisfactory to the inflationists, to soothe whose wound¬ 
ed feelings they have been prepared; and they will 
seek to amend a harmless bill into a hurtful one. But 
whatever may be done or left undone this year, no ef¬ 
fort must be relaxed to secure in the next Congress a 
majority that will respect the lessons of history and ex¬ 
perience, and recognizing the great peril of the present 
situation, will adopt measures not only to rescue us 
from danger but to bring us back to a sound currency. 


What is to be Done Next? 

The Chicago Times, in an appeal to its readers at the 
West, where the great battle for honest money is to be 
mainly fought, admirably states the duty of the hour : 

The business men of Chicago and other western 
cities have protested against inflation and repudiation ; 
The first victory is on their side. Now let them pull 
off their coats and hold fast to what they have se¬ 
cured, or it will slip away from them again next win¬ 
ter. But let them hoi 1 fast and push on, and a second 
and final triumph will be theirs next November. 
Their force-' are invincible. Nine tenths of the busi¬ 
ness men, professional men, and men of education 
generally are of one mind. The Germans are with them 
almost to a man. Fully one-half of the farmers and the 
most intelligent mechanics are with them. The Presi¬ 
dent is with them. Nothing is wanting but concert of 
action, and earnest effort for the dissemination of sound 
doctrine and correct information. Itls not enough that 
the leading newspapers expose the fallacies of the in¬ 
flationists, it is not enough that clearing-house associa¬ 
tions, boards of trade, and merchants’ exchanges adopt 
vigorous resolutions. There must be organization. 
Clubs ought to be organized throughout theWest includ 
ingin their membership not only those who are promi¬ 
nent as business men and financiers, but all who feel an 
interest in the establishment of a sound financial policy, 
in the general welfare and prosperity of the country, and 
in the maintenance of the public credit. These clubs 
should exist and co-operate for the purpose of awaken¬ 
ing thought, inculcating sound principles, disseminat¬ 
ing information, and preparing for effective action 
when the congressional elections take place next fall. 

A repudiation newspaper has lately said, “You have 
refused us $801.000 000 of paper. Very well. Wait 
until after the election next fall, and we will take 
$1,000,000,000 at least, in spite of you.” And this 
threat is undoubtedly in the hearts of every one of the 
repudiationists, though most of them are too prudent 
to utter it. This is what all the Washington talk 
about a compromise measure means. It is a gambler’s 
device to deceive the country to it ruin. It is a dan¬ 
gerous game, undoubtedly. It is a game in which the 
Wall street gamblers, the money sharks, the confidence 
swindlers, the stock and bond speculators, the whole 
confraternity of “cheap money” swindlers, hope to 
win by dece’t and false pretensps. And it will not be 
defeated by Messrs. Ease & Couiiort, who sit in their 
cushioned office chairs and flatter themselves that the 
President’s veto is a finality on the currency question. 
Repudiation has got a footing vastly stronger than it 
had in 1868. The “States lately in rebellion,” Texas 
alone excepted, are “solid” for repudiation. In 1868, 
Pendletonism had hardly any footing in the South. 
The Eastern and Middle'States are a unit in favor of 


resumption. The Pacific States are on the same side. 
The West is the battle-ground on which the most tre¬ 
mendous of all the bloodless political contests in our 
history must be fought. The repudiation gamblers 
assume, with vast impudence, that the West is on 
their side. The assumption is unwarranted. Never¬ 
theless, it is true that, in the great contest between re¬ 
pudiation and resumption, which inevitably approaches, 
the West will exhibit a division more nearly equal than 
any other section. On which side the balance of po¬ 
litical power in the West will fall may depend on the 
promptness and vigor with which the resumptionists 
put their forces in the field. 


Spirit of the Press. 

[New York Independaut.] 

The expectation that the President would sign such 
a bill, supposes him to be either utterly oblivious of his 
awn past position, and also that of the Government, or 
recreant and false to their requirements. By the act 
he would have dishonored himself in the estimate of 
every sensible man and brought great discredit upon 
the public faith. What was this bill, in the view and 
design of those who passed it 1 Simply a measure for 
inflating the currency by the addition of ninety mil¬ 
lions to its volume, without a solitary provision for in¬ 
creasing its value or looking ever 60 remotely toward 
specie payment. It turned all the past pledges of the 
Government into falsehoods. It was, indeed, the first 
downward step toward ultimate repudiation. The bill 
should have been entitled “An act to destroy public 
confidence, to violate the national faith, to ruin the Re¬ 
publican party, to disgrace the President of the United 
States, to Butlerize the conscience of the people, to put 
in peril the business interests of all classes, with the ex¬ 
ception of gold gamblers and speculators, and prepare 
the way for repudiating the national debt.” 

[VYarrensburg (Mo.) Standard.] 

The paper money men say that “Inflation will bring 
down the rates of interest.” If this means that those 
who are now paying interest on money borrowed be¬ 
fore the inflation will pay less interest when the cur¬ 
rency in which they pay has been diluted, it is correct. 

If the currency is watered ten per cent, the $100 paid 
as interest on money borrowed a year ago, will be 
worth but $90. We shall cheat our creditor out of $10, 
and when we pay the principal of that $1,000 note, we 
shall really pay but $900. 

[Louisville (Ky.) Commercial.) 

The people are for inflation by a decided majority. „ 
Numbers and wisdom do not always coincide, Jiut num- - 
bers always rule in this country. We believe the peo¬ 
ple will change their minds on this question from sor¬ 
rowful experience, but it is as useless to try to con¬ 
vince them of it now as it would be to get a toper to 
sign the temperance pledge when he was just beginning 
to enjoy the exhilarating effects of a good toddy. 

[Springfield (Mass.) Republican.] 

By a sound currency, is meant a currency that is 
money and not rag, a measure of values and not a con- 
fuser of them, a fact and not a lie. Until we get back 
to such a currency, we are adrift on a sea that is paved 
with wrecks. So long as we are not visibly and re¬ 
solutely nearing it, we are courting disaster. Sooner 
or later, we have got to make our way back to specie 
payments, to the money of the civilized world. The 
sooner, the better for us ; the later, the worse. 


Orator Puff 

Edits a newspaper in Chicago,called the Inter-Ocean, or 
Half Seas Over, and the mixed condition of its editorial 
comments on the state of trade and the money market, 
well corresponds to its name. On the 25th of April, 
when mourning over the veto, Editor Puff said, “Times 
are hard; trade, commerce and manufacturers are lan¬ 
guishing ; the projects for the improvement of the coun¬ 
try, and for the building up of trade, are abandoned for 
want of money.” This dismal picture was presented on 
the editorial page. But among the Washington dis¬ 
patches that appeared in the same number of the same 
paper was the following : 

Calculations at the internal revenue office in regard to 
the entire amount of internal revenue tax collected, show 
that the receipts of the last few weeks from all sources 
of internal revenue have exceeded those of the corres¬ 
ponding period of last year, and that if the present rate 
continues through the month the receipts of this April 
will exceed those of last April by $500,000. 




































38 


THE FINANCIAL KECOKD. 


This increase, which is at the rate- of $0,090,000 a 
year, would hardly be taking place in a state of things 
so distressing as represented above. In the commer¬ 
cial and financial columns of the same paper, we find 
the following : 

The supply of loanable funds is ample and all ap¬ 
proved borrowers get it without any trouble at 10 per 
cent on their paper or at 8 per cent, on such few collat¬ 
erals as are accepted by banks and money-lenders now. 
The trouble with financial affairs now is not so much a 
lack of money—for there is plenty of it lying idle, not only in 
the hanks in this city, but in the country —but there is a lack 
of confidence and a depression of enterprise which has 
prevailed ever since the cessation of railway building in 
the West last fall. 

“O, Editor Puff! balmy Editor Puff, 

One voice the same Saturday’s surely enough.” 

Currency Defined and Illustrated. 

PRIMARY LESSONS FROM THE WEST. 

The friends of honest money in Iowa are publishing 
some screeds o’f sound doctrine there, as for example 
this, which we found in the Sioux City Journal, and 
which may go along with the short catechism of Air. 
Perkins, published last week. 

The whole currency of a country at any given time, 
is a unit of fixed value, and the parts or dollars into 
which it is divided, are merely fractions of that unit. 
If you divide the unit ot fixed value into a greater 
number of parts or dollars, you do not increase the 
value of the unit any more than you would increase the 
length of a foot by dividing it into forty parts and call¬ 
ing them inches, instead of twelve ; what you do effect 
is merely to dimmish the value or purchasing power 
of the dollars, in the one case, and the length of the 
inches in the other. These facts explode the doctrine, 
that there is something mysterious or incomprehensi¬ 
ble about the currency, and show that it is simple 
and easily understood, and is governed by, substan¬ 
tially, the same laws as any other commodity, as wheat, 
or wool, or salt, or iron. They show that, like all other 
commodities, the value of the dollars of a country 
mainly depends on two things, the supply and the de¬ 
mand ; that the demand being the same the value of 
dollars is increased as you decrease, and decreased as 
you increase the supply ; and that the supply being the 
same the value of dollars is increased as you increase 
and decreased as you decrease the demand. The de¬ 
mand is principally determined by the wealth and ex¬ 
changes of the country; by the values to be measured, 
just as the demand for bread-stuffs is mainly deter¬ 
mined by the number of mouths to be fed, and the de¬ 
mand of each country is just that portion of the curren¬ 
cy of the world which, considering the wealth and ex¬ 
changes of the country and the manner in which it 
transacts its business, it is entitled to for the purpose 
of affecting its exchanges. When it has just this 
amount the supply is normal or natural. When it has 
more the currency is expanded, when it has less'it is 
contracted. If, for any actual reason, the supply ex¬ 
ceeds the normal supply, then it exceeds the demand 
and the value or purchasing power of the dollars is 
thereby correspondingly diminished, just as the value 
of a bushel of wheat is sometimes diminished by an 
over production. If the currency of the country is 
specie, and there is nothing to prevent it going abroad, 
then as soon as the purchasing power of its dollars is 
diminished at home by the over supply they will begin 
to go abroad—to go where they will buy more than 
they will at home, and they will continue to do so until 
the supply becomes normal, or exactly adjusts itself to 
the demand. In other words, the owners of dollars 
will naturally take them to that market or country, 
where they will buy most, just as the owners of wheat 
will take it to that market where it is worth most. 
Thus, where the currency of a country is specie, or 
where the amount of its paper is less than the normal 
supply the laws of trade will always regulate its amount 
and adjust it to the demand, and its dollars cannot 
long remain either of greater or less purchasing value 
than those of other civilized countries. 

It it be urged that the amount of currency per capita 
is not so large here as in some European countries, the 
answer is that the amount needed is not proportionate 
to the population, but depends principally on the 
wealth and industries of the country, the exchanges to 
be effected and the method of effecting them, or of do 
ing business, and that where, as in this country, busi¬ 
ness is done largely on credit.—the promises of individ 
uals. the paper of corporations, and corporate, muni¬ 
cipal. State and National bonds, supply to a considera¬ 
ble extent the place of currency, and to that extent 
diminish the amount required. Indeed, as the fact 
that gold is at a premium is the conclusive evidence 
that paper dollars are depreciated, so the fact that they 
are so depreciated while the credit of the Government 
on which they are founded remains unimpaired, is the 
conclusive evidence that the actual supply exceeds the 
normal supply. If it did not, they could not, under 
such a state of facts, possibly be depreciated. 


If, then, as is universally conceded, it is desirable to 
appreciate our currency to a specie standard or value, 
it follows that Congress should not authorize the issue 
of any more paper money. Expansion is disastrous be¬ 
cause it stimulates speculation and over production, 
because, as it affords opportunities for the sudden ac¬ 
quisition ot wealth without a corresponding considera¬ 
tion, it leads to an underestimate of its value and to 
habits of extravagance and luxury. “Come easy, go 
easy,” is a law of our nature. It also necessarily pro¬ 
duces a lowering of the standard of morality. You 
cannot get something for nothing, even though you do 
it legally, without a lowering of your moral nature. If 
you and your neighbors do not feel that you are a thief, 
you and they must at least realize that by as much as 
you have gotten some one else has been wronged. 
Either, therefore, you are lowered in your and their es¬ 
timation, or your and their moral natures are blunted 
or destroyed. Nor is this all—like all earthly things, 
expansion must have its end ; and then, those who 
have fattened by it, their occupations gone, their wants 
increased, their moral natures blunted and destroyed, 
turn and rend each other and the public ; and swindles 
and defalcations, watered and bogus stocks, corners 
and rings, Credit Mobiiier steals, and salary grabs, are 
the legitimate results, and all manner of vices and 
crimes, the natural outgrowth. It is exactly from this 
cause that the country is now suffering; it is exactly 
this crop of corrupt practices, it is exactly this festering 
outgrowth of vices and Crimea which now confronts 
and appals us. 


Redistribution—Free Banking-—A St. 
Louis View Thereof. 

The St. Louis Globe thus casts the horoscope of the 
inflationist majority in Congress : 

Congressional inflationists have only two alternatives 
left them, a free banking bill, and a bill to redistribute 
the currency. If a passage of them will afford any 
gratification to their friends, it would be a pity to stand 
in the way of such harmless pleasure. Both are al¬ 
ready before Congress. They have got the start of the 
interconvertible bond, and the universal loan on the se¬ 
curity of citizenship, and as they are of the same gen¬ 
eral nature, they may very well be considered together. 
The redistribution of the currency will come up in the 
shape of an inquiry why the currency refuses to be re¬ 
distributed. It is a case of reprehensible obstinacy on the 
part of the best currency under the sun, to reluse to be 
redistributed when, those who have risen up and called 
it blessed order it to do so. Here are the States which 
are positively brought to death’s door for want of cur¬ 
rency ; States which, speaking by eloquent, learned 
and patriotic Senators and representatives, have plead¬ 
ed their hard condition as demanding inflation, and 
have ascribed that hard condition solely to the insuffi¬ 
ciency of the existing currency. Yet these States not 
only have the right to obtain and issue $25,000,000 of 
currency to be withdrawn from those States which are 
over-provided, but they are entitled to $4,000,000 more, 
which are lying uncalled for. 

And as Congress is trying to establish a precedent 
of invariably passing two utterly irreconcilable meas¬ 
ures at the same time, the inquiry into the failure to 
redistribute twenty-five millions is of course accom- 
•panied by an effort to redistribute fifty millions by the 
same process which has failed to redistribute the small¬ 
er amount. As the first failure illustrates the easiness 
of leading a horse to water and the impossibility of 
making him drink, it would not be asking too much to 
request Congress to wait until the Western horse had 
swallowed the twenty-five millions which he refuses to 
absorb before stuffing his belly with the fifty millions. 
Four years ago he was led up to this reservoir of cur¬ 
rency ; four years ago his nose was thrust down into 
the pellucid depths of the waters of redistribution, but 
he has not drank a drop—his belly is full. But while 
the wildest inflationist and most conservative eontrac- 
tionist may equally support or condemn a redistributing 
bill, a free banking bill, which is merely an exaggera¬ 
tion of the folly, might be understood to permit the 
foundation of new banks of issue in the Eastern mon¬ 
ey centers, where the large accumulation of bonds 
would very easily be turned to a basis for the issue of 
notes. As this is just what the East does not profess to 
want, and as it is what the West has been struggling 
against, the possibility of such a result will be likely 
to cause Western statesmen to take hold of it very 
cautiously. There is an expansive, generous, whole- 
souled, popular sound about the term “free banking,” 
which has a fascination for Western sentiment and tra¬ 
ditions ; but when it is found to mean that restrictions 
on the profit of issuing notes, which now alone prevent 
the competition of Eastern bankers from driving West¬ 
ern bankers entirely out of the business, shall be entire¬ 
ly removed, and our limited capital and high rates of 
interest be made to compete under federal laws with 
the heaped up treasures and low interest of Boston and 
New York, the question will wear quite another as¬ 
pect. * 


The Veto iu the Northwest. 

The Veto has proved to be “a mighty persuader of 
Republican opinion,” and not without effect on Demo¬ 
crats. The Milwaukee News, a Democratic paper, 
which went for “more money” before the veto, now- 
pronounces against inflation. The Milwaukee Sentinel 
opines that the great West is aroused to the vindica¬ 
tion of its rights—meaning its right to have a depreci¬ 
ated currency. The Janesville Gazette, on the other 
hand, cautions the Washington politicians to consult 
the people before they rashly make war on the Presi¬ 
dent. The Burlington Hawkeye welcomes the issue, 
and it invites the inflationists to make it without delay 
if they think it will pay dividends. The Des Moines 
Register hopes the Western and Southern members of 
Congress will have the courage to fight it out on as ob¬ 
stinate and courageous a line as the President himself 
has laid down. The Terre Haute Express calls on Mor¬ 
ton to make a direct issue with the President, and to 
appeal to the country for support. The Evansville 
Journal calls for indignation meetings to overawe the 
President. The Illinois State Journal believes that the 
Republican party of Illinois will side with Logan and 
Oglesby on this issue. The Chicago Tribune gives 
these figures recording the position of Newspapers : 

On the 



Sustain. 

Oppose. 

fence. 

Illinois . 


44 

14 

Indiana. 


13 

, . 

Michigan.... 


5 

1 

Wisconsin ... 

.25 

7 

1 

Minnesota ... 


1 

• . 

Iowa. 


lfi 

2 

Kansas . 

. 3 

11 

.. 

Nebraska.. .. 

2 

1 

i 

Missouri . 


7 

• • 

Territories.. ., 


•• 

•• 


180 

105 

19 

The analysis 

of the Illinois list, 

so far as 

known to 

:, shows 35 Republican newspape 

rs, and 20 

not Re- 


publican, now sustaining the financial views of the 
President; and 27 Republican papers, and 17 not Re¬ 
publican, now agreed in opposing those viewe. 

All the leading newspapers of Illinois, Minnesota, 
Ohio,Michigan and Missouri rejoice at the defeat of the 
dishonest policy of Logan, Morton and Merrimon, and 
sustain the veto. In Ohio, among the large dailies, 
only the Cincinnati Enquirer and the Toledo Blade con¬ 
demn it. The Chicago press, with the exception of the 
Inter-Ocean and Post, are all outspoken against inflation. 
In Minnesota the leading dailies of both parties are 
heartily delighted with the veto. In Indiana and south¬ 
ern Illinois the inflationists make a respectable showing. 
But it is evident that very nearly all the able news¬ 
papers of the country are for sound money. The 
most influential newspapi rs in the northern States which 
still sigh for “cheap money” are the Philadelphia Press, 
the Pottsville Miner’s Journal, the Cincinnati Enquirer, 
the Indianapolis Journal, the Chicago Inter-Ocean, and 
the St. Louis Democrat. 


Tlie Speculators Opposed to Resumption. 

The resumption policy is opposed, and a new infla¬ 
tion of the currency pressed by three classes ot persons : 
first; the men who, with honesty of purpose and patri¬ 
otic intentions, have arrived at what I consider errone¬ 
ous conclusions—and on this floor we have heard their 
voice; secondly, men who, hearing the cry for more 
paper money, think it a popular cry, and therefore 
join in it; but behind them, pushing on with all the 
energy of unscrupulous selfishness, is a third class, con¬ 
sisting of speculators and gamblers, who were caught 
by the recent Vevulsion in the midst of their reckless 
operations, stripped of their spoil, and involved in 
heavy liabilities, who now want no end of inflation and 
further depreciation of the currency to settle their old 
scores cheaply, to recover their losses, and then to set out with 
full sail aqain on a new- career of speculation and gambling, 
knowing full well that they are only preparing a new 
crash, but hoping to reap at least their harvest before 
it comes, and then “let the devil take the hindmost,” 
no matter what may become of the country. 

The first of these classes we may hope to convince 
by sound argument. The second may be turned by a 
new breeze of opinion, clearing away the fog and re¬ 
vealing that.the cry for more irredeemable paper mon¬ 
ey is not the cry of the people after all. But the third 
class consists of men of purpose, selfish, unbending, un¬ 
scrupulous Active and cunning as they are, no trick 
from falsification of public opinion to downright coi- 
ruption, will be left untried by them in their effort to 
control the movements of the business world as well as 




























THE FINANCIAL KECOKD. 


39 


tlie legislation of the country. To-day they are still in 
a somewhat crippled condition, for the crisis has happi¬ 
ly curtailed, their means and exposed the character of their 
schemes ; but before long they will be as powerful as 
ever, if the continuance of the present system enables 
them to recover from the recent shock and to entangle 
the business community of the country obce more in 
the net of their operations, so that their fate will in¬ 
volve the fortunes of many others. Would it not be 
well to take advantage of their weakness ?— Carl 
Schurz. 

Inflation in Cuba. 

The Island of Cuba evidently needs a veto badly. 
Five years ago it had as sound a currency as any in 
the world. The standard was fixed and stable, every 
value being regulated by gold. Taxes were enormous, 
but labor was well rewarded, because the money which 
the laborers received was not depreciated in value. 
Now all is fearfully changed. The war came on, and 
the Government not only increased taxes, but resorted, 
like ours, to irredeemable money. The Bank of Havana, 
with a capital of SS,000,000, after loaning that sum to 
the Spanish Government, was authorized to issue irre¬ 
deemable currency to the extent of 500,000,000. That 
amount is already outstanding, and, in consequence, a 
paper dollar is worth only 45 cents in gold; that is, gold 
is 1.55. The decline in the purchasing power of the 
currency has already brought upon the laboring classes 
a greater calamity than the war and high taxes. A 
Havana correspondent, under date of March 28, writes : 

The suffering among the poorer classes is intense ; the 
numerous class of seamstresses, sewing being about the 
only branch of labor left open to women in Cuba, is on 
the point of starvation, and only the benignity of the 
climate and the exceedingly small quantity of food re¬ 
quired to sustain life has prevented the horrors wit¬ 
nessed in cold climates. Everything is rising, not only 
in proportion to the depreciation of the paper, but even 
by putting the article on a gold basis. 

And this is the very result to which the inflation 
schemes of Morton, Logan and Carpenter tend to pro¬ 
duce upon the laboring classes of this country. It was 
well for General Grant to nip them with the frost of a 
veto. 

There is another West India island in which the 



In San Domingo, for many years past, the problem of 
making money plenty by emission of legal tenders has 
been solved. The earliest issues are worth nothing. 
The latest is at a discount of twenty per cent; the 
one before it is sixty-six per cent off, and the one that 
preceded that is so depreciated that four hundred dol¬ 
lars of currency are worth but one dollar in silver. 
The people have plenty of money, but the money has 
no purchasing power. Repudiation is inevitable. 

The Workingmen and the Currency. 

The Indianopolis Evening News, which has done good 
service in the battle for honest money, thus disposes of 
the fallacy by which the workingman is to be argued 
into a belief in shinplasters : 

The laboring classes suppose, with some reason, that 
inflation means high pri es for everything, labor inclu¬ 
ded. How then is their condition improved if their 
wages are raised in proportion to the depreciation of 
the currency, and there is a corresponding increase in 
the price of everything they consume ? But experience 
has proved that the prices of everything rise before 
that of labor, so that if we had inflation to-morrow the 
prices of dry goods, groceries, and merchandise of all 
kinds would rise, an unhealthy stimulus would be giv¬ 
en to speculation in outside lots, stocks, etc., while the 
laboring man would have to bide his time, and perhaps 
in the end resort to a strike. We appeal to the labor¬ 
ing men to answer if it be not true that the price of 
labor is the last thing to rise. Was not this the case 
when prices began to rise at the beginning of the war ? 
Imagine a workman going to his employer and saying, 
“The currency bill has been passed, I want five percent 
added to my wages.” How many of the blatant infla¬ 
tionists now crying for more printed lies, would listen 
to them ? 

Another mistake too often made is that the laborer is 
the debtor of the community. Again we ask the labor¬ 
ers to answer for themselves, do they not, as a class, 
“pay as they go,” and are many of them so heavily in¬ 
debted as to be materially benefited by a depreciation 
of from three to' five per cent in the money with 
which they pay their debts. It is the so-called better 
class, the spendthrift sons of wealthy parents, the spec¬ 
ulator in stocks, out-side lots, cotton, etc., the bank¬ 


rupt merchants and bankers, who constitute the debtor 
class. Poor men can not get extensive credits. It is 
the operator in Wall street who wins or loses thousands 
upon a rise or decline of one per cent in stocks or cur¬ 
rency, and who is eagerly watching the flow and ebb of 
inflation sentiment, and betting thousands upon the 
one side or the other, he cares not which. Few labor¬ 
ing men know the price of gold to-day or yesterday, or 
care for the fluctuation of one or two per cent, since 
their wages remain the same. 

It remains for us to dissipate one other delusion: 
that inflation would give an impetus to business, that 
all the factories which have ceased work would resume, 
and thus laborers would get employment. This might 
be so if Congress put a certain amount into the hands 
of every employer who had been crippled by the panic. 
But they will l ave to get their money by the usual 
means of buying and selling, and they will have to buy 
everything at inflation prices and sell at the same, and 
they are no better off than before. It will require 
more money to carry on business. 

Inflation means high prices for everything, but labor 
last of all, and not for that unless the inflation be great¬ 
er than that proposed ; and prosperity is not measured 
by the number of dollars we receive, but by the 
amount of necessaries and luxuries we can purchase 
with our income. 


“It was such a kittle Baby your Honor.” 

The Philadelphia Press mourns for the lost Senate 
bill, and refuses to be comforted, thus : 

It did not occur to us that though a debt made up of 
$1,700,000,000 of bonds and $356,000,000 of greenbacks 
mightbe safe and honorable enough, adding $44,000,- 
000 more of the latter would make that debt danger¬ 
ously large, “cover the national escutcheon with dis¬ 
honor,” and all that sort of thing. Since the country had 
paid off several hundred millions of the debt within the 
last few years, and with a sufficient supply of the 
medium of exchange could be expected to pay off other 
hundreds of millions in the next few years, we did not 
see how the national credit was to receive a very violent 
wrench from this paltry addition of less than fifty mil¬ 
lions to the nation’s outstanding paper, in compliance 
with an imperative demand from the great body of 
thepeople, especially when more than two-thirds of the 
additional notes had actually been in circulation for 
months, without any bad results. True, the bill pro¬ 
vided also for slightly relaxing the rigid monopoly 
feature of the national banking law by permitting 
$46,000,000 more of bank notes to be issued, but these 
would not have been Government paper. 


The Wants of the South. 

A Kentucky newspaper well says : 

The South is suffering from the loss of capital con¬ 
sequent upon the rebellion and the demoralization 
caused hv it, but the cure for this is not inflation, it is 
not the issue of more irredeemable promises to pay. 
You can not create capital by mere legislative enact¬ 
ment, nor make money cheap and plentiful by authori¬ 
ty to establish national banks in any section. Authori¬ 
ty already exists to form national banks of circulation 
in all the States of the South. Why is it not done? 
Simply because it does not pay. In other words, with 
Government bonds at 115 in currency, it requires $115 
in greenbacks to buy $90 in national bank notes, of 
which a reserve of at least fifteen per tent must be 
retained in the vaults of the bank. It is clearly evident, 
therefore, that the $115 in greenbacks would benefit a 
section more than the $75 in national bank notes. But, 
say the expansionists, give us more greenbacks, “they 
are the boys for us.” Well, let us see how they will 
affect us. In the first place, in making issues of them 
the Government must receive a consideration. It 
won’t do to give them away. They must be used in 
paying its debts, retiring some of its funded obligations, 
or expended in public improvements. The - South cer¬ 
tainly does not hold these demands, hence in paying 
its debts none of this new issue would go to that sec¬ 
tion, and it is only in case of expenditures, for public 
improvements that any portion of a new issue of green¬ 
backs would goto and be retained by the South. We 
think, then, that it is pretty evident, that ‘more cur¬ 
rency” is not what we want. What do we want, then? 
We reply, immigration, influx of foreign capital, more 
energy, industry, and economy, a utilization of our 
great resources, and a stable currency at par with gold. 
These given, and the South will enter on a new era of 
life and progress. 


Iron, Railroads and Inflation. 

The Philadelphia Press has been asserting that the 
iron men of Pennsylvania were unanimously in favor 
of inflation. An iron-master of the Schuylkill Valley 
writes to Mr. Forney as follows: 

“Whilst my acquaintance is not very extensive, all 
the iron manufacturers, almost without exception, with 
wham I have conversed on the subject, have expressed 


themselves opposed to an increase of currency. We do 
mot think any more is needed, as an increase of curren¬ 
cy will not fill the pockets of those undeserving of 
credit, and any one worthy of credit can get now all 
the currency he needs.” 

It is true that many iron men,especially amoDg those 
who prod uce railroad iron chiefly, favor inflation. This 
is the case with Mr. E. B. Ward of Detroit. The panic 
of last fall put a stop to the business of wild cat rail¬ 
road projecting and building, and very greatly reduced 
the demand for railroad iron. Of course the producers 
of this iron suffer from the collapse, and it is not un¬ 
natural that they should be desirous of recovering 
their lost market by stimulating railroad building, or 
that they should favor new issues of paper money as a 
means to this end. But some of them are clear sighted 
enough to see that a forced and unnatural railroad 
growth, produced by inflation, would end at no distant 
day, in another collapse more disastrous than the last. 
They know that their permanent prosperity depends 
upon the legitimate demand for their products, arising 
from the natural and healthy development of the coun¬ 
try, and that they have nothing but disaster to expect 
from the construction of railroads far in advance of the 
demand for them. It was the premature construction 
of railroads through wildernesses that did more than 
any other one thing to precipitate the panic of last fall, 
and long-headed iron men understand perfectly that 
more forcing in the same direction by inflation will only 
make matters worse in the long run. But one great 
element in the recent manufactured zeal for inflation 
was the wish of Jay Cooke and others interested in 
overdone railroads to have a cheaper currency. 

A Fair Hit. 

The weak point in the veto message undoubtedly is 
that where the President depends the issue of the can¬ 
celled reserve by Secretary Richardson. The inflation¬ 
ists have found this out, and the Indianapolis Journal, 
Senator Morton’s organ, turns the argument very neat¬ 
ly against Gen. Grant. The Journal says of the mes¬ 
sage : 

We have already pointed out some inconsistencies 
in the document, and a closer scrutiny discloses others. 
For instance, the President put himself in the unfortu¬ 
nate and untenable position of claiming a legislative 
power which he denies to Congress. The right to fix 
the amount of legal tender currency is undoubtedly a 
right of Congress. The legal tender notes are the cre¬ 
ation of Congress. No one has ever questioned the 
right of Congress to contract their amount, nor can 
there be any more doubt as to its right to increase the 
amount. This it assumed to do in the recent bill, to 
the extent of changing the legal limit from §356,000,- 
000 to §^00,000,000, and authorizing the issue of the 
remainder of the reserve fund. Yet by his veto mes¬ 
sage the President virtualiy denies the authority of 
Congress to do this, while he claims the right to do it him¬ 
self. In his last annual report the present Secretary of 
the Treasury said, referring to this reserve fund: “In 
view of the uncertainty which exists in public senti¬ 
ment a3 to the right of the Secretary of the Treasury 
to issue United States notes in excess of the minimum, 
($356,000,000) and the conflict of opinion as to the pol¬ 
icy of doing so, conceding that he has that right un¬ 
der the law, I respectfully recommend that Congress 
shall set these questions at rest by a distinct enactment.’' 
That was precisely what Congress aimed to do, and 
what the currency bill would have done, by authoriz¬ 
ing the issue of the residue of that fund and fixing the 
maximum limit of greenbacks at $400,000,000. But 
the President, while denying the right of Congress to 
do this, claims the right to do it himself, notwithstand-, 
ing that he said in his last annual message “the deci¬ 
sions of Congress on this subject will have the hearty 
support of the Executive.” 


Humors of Finance. 

A CONFEDERATE PARABLE. 

The Petersbur Index says : 

Suppose a wagon to be meandering along a dusty 
road, a wagon not heavily laden and drawn by powerful 
steeds. Two small boys, (after the fashion of boys,) 
being weary of the long and hot road, swing on to the 
coupling-pole, and enjoy a ride none the less grateful 
for its being surreptitious. Such a casual carriage 
would relieve the small boys, and not in any wise hurt 
the vehicle or the team. But if the teamster find the 
boys there innocently hidden, and cut at them and cuss 
at them, and swear by the Holy Poker to saw ’em off 
with buzz-saws or blow ’em of with nitro-glycerine, 
yea, even to slay the steeds and burn the wagon if they 




















40 


THE FINANCIAL RECOED. 


didn’t descend from their swinging perches ; why, we 
say, of course, that the wagon is the wagoner’s and the 
fullness thereof, and that, in the interests of good gov¬ 
ernment and social peace, the small boys ought to re¬ 
tire in decent order. So of the extra issue : the South 
and West needed a lift and they got up behind one of 
Uncle Sam’s treasury wagons. Not that the small 
boys meant to take anything, except the small ride 
which wouldn’t be anybody’s loss or cross. But the 
capitalists who own the country and the government, 


and of course, its treasury wagons, raised a tremendous 
fuss about it and swore that the small boys had got to get 
down or else they would even destroy this prodigious 
Union. The small boys didn’t descend, however, till the 
President helped them down. The President did well 
and wisely, we submit, to help them down. Next 
time, the West and South will get into the wagon, and 
probably take charge of the ribbons and the horses; 
and then there will not be anybody to make any both¬ 
er about their riding as far and free as they choose; 


and if anybody does make a bother, the West and 
South will not care a Confederate cuss-word. 

W e send our subscribers this week a Veto Extra which 
they will find useful for reference. On the first page 
the heading “The Bill Reduced to its Absurdity,” is 
in a few copies misplaced; it should stand before Mr. 
Schurz’s first speech. We can supply copies of the 
Extra, to such as wish for them, free of charge. 


SPECIAL NOTICE. 


[Some changes and additions have been made since the announcement of May 1.] 

Hmcritau Social 3tmt 


The customary General Meeting of the Association will take place this year at New York, from the 19th to the 23d of May. The 
persons engaged to read papers, with their subjects, and the order of business, so far as determined upon, are as follows : 

first session. (Tuesday, May 19, 7.30 p. m.) 

An Address by the President, George William Curtis, Esq. 

A Paper by Cephas Brainekd, Esq., of New York, on The Social Science Worlcofthe Young 3fen’s Christian Association. 

A Paper on Financial Administration, by Gamaliel Bradford, Esq., of Boston. 

second session. (Wednesday, May 20, 3 p. m.) 

A Paper by Rev. Dr. Woolset, of New Haven, on The Exemption from. Capture of Private Property upon the Sea. 

A Paper by Willard C. Flagg, Esq., of Moro, III., on The Farmer’s Movement in the Western States. 

A Paper by President D. C. Gilman, of the University of California, on California and its Relations with the other United States. 

third session. (Wednesday Evening, 8 o’clock.) 

A Paper by D. A. Wells, Esq., on Rational Principles of Taxation. 

A Paper by Prof. Benjamin Peirce, of Cambridge, on Ocean Lanes for Steamship Navigation. 

A Paper by Gardiner G. Hubbard, Esq., of Boston, on American and European Railroads. 

fourth session. (Thursday, May 21, 3 p. m.) 

A Paper by Dr. J. Foster Jenkins, of Yonkers, New York, on Tent Hospitals. 

A Paper by Dr. Alfred L. Carroll, of New York, on Hggiene in Schools and Colleges. 

A Paper by Dr. Albert Day, of Boston, on The History and Results of Inebriate Asylums in America. 

>A Report from the Health Department. 

fifth session. (Thursday Evening, 8 o’clock.) 

A Paper by non. Charles A. Buckalew, of Bloomsburg, Pa., on The New Pennsylvania Constitution. 

A Report from the Finance Department, by Prof. W. G. Sujiner, of New Haven. 

A General Discussion on Financial Questions. 

SIXTH session. (Friday, May 22, 3 p. m.) 

A Report by the General Secretary, F. B. Sanborn, on The Work of Social Science in the United States. 

A Report from the Department of Social Economy, on Pauperism in the City of New York. 

A Paper by Z. R. Brockway, Esq., of Detroit, Mich., on The Reformation of Prisoners. 

seventh session. (Friday Evening, 8 o’clock.) 

A Paper by Hon. Andrew D. White, of Cornell University, on The Relation of National and State Governments to Advanced Education. 

A Paper by William W. Greenough, Esq., of Boston, on Public Libraries. 

A Report from the Department of Education. 

At the First and the last Session the President (Mr. Curtis) will occupy the Chair, Dr. Woolsey will preside at the Second Session, and Mr. D. 
A. Wells at the Fifth Session. Hon. Edwards Pierrepont is expected to preside at the Third Session, and Jackson S. Schultz, Esq., at the 
Fourth. A few persons will be invited to discuss each paper in speeches of ten minutes each. On Wednesday, May 20, at 10 a. m., there will be a 
Conference of the Boards of Public Charities in the United States, (George L. Harrison, Esq., President of the Pennsylvania Board, in the chair,) 
and a conference of Boards of Health on Thursday, May 21, at the same hour, (Hon. Dorman B. Eaton in the .chair ) It is proposed also to hold a 
session of the Boards of Health and of Public Charities united on Friday, May 22, at 10 a. m. Delegates from the State Boards of Public Charities 
of New York, Pennsylvania, Massachusetts, Connecticut, Michigan and Wisconsin, have promised their attendance, and it is hoped that all the Boards 
in the country will be represented, either by delegates or by letters. Among the subjects which wifi be brought before the Conference on Wednes¬ 
day, for consideration, will be : 

I. The Duty of the States Toward Their Insane Poor. (Dr. John Ordronaux, of New York, will discuss thisj 
II. The Laws of Pauper Settlement, and the Best Method of Administering Poor Law Relief. 

III. The Prevention of Pauperism. (Dr. S. G. Howe and others to discuss this.) 

In connection with this second topic a report from the Jurisprudence Department on The Poor Laws of Massachusetts, will be presented. 

Subjects suggested for the Conference of Thursday are these : 

I. The Proper Organization of Health Boards. (Hon. D. B. Eaton is expected to discuss this.) 

II. The Powers and Duties Proper to State Boards. 

III. The Powers and Duties of City Boards. (Dr. Stephen Smith is invited to discuss this.) 

IY. Vital Registration, and the Proper Use of Vital Statistics. 

It is expected that Dr. Elisha Harris, of the New York City Health Department, will read a paper on the last named topic. 

All the Sessions and the Conferences of the Boards of Health and Public Charities wifi be held at the Hall of the Young Men’s Christian 
Association, corner of Fourth Avenue and 23d Street. 


Issflthtioit, 

Boston, May 8, 1874. 











“WE NEED ONE THING BESIDES MORE MONEY, AND THAT IS BETTER MONEY .’’—Senator Zach. Chandler. 

<v 

__ - 

VOL. L FRIDAY, MAY 15, 1874. NO. 15. 


The Financial Record will be continued until further no¬ 
tice and will be sent free of postage, to all persons who will re¬ 
mit 50 cents to the publishers. All editors who receive it are 
invited to send their papers ia exchange. It will be no longer 
published by the American Social Science Association, 
but for the. present, as heretofore, communications respecting it 
may be addressed to the Secretary of the Association, F. B. San¬ 
born, No. 5 Pemberton Square, (Room 21,) Boston; and all ex¬ 
change papers, public documents, etc., may be forwarded to the 
same address. 


National Promises. 

“The United States will pay bearer one dollar.” 

United Stales legal tender-note. 

“The gold coins of the United States shall be a one 
dollar piece, which, at the standard weight of twenty- 
five and eight-tenths grains, shall be the unit of 
VALUE.” —Act of Congress, February 12, 1873. 

“The United States solemnly pledges its faith to 
make provision, at the earliest practicable period, for the 
redemption of the United States notes m coin,”—Act 
of March 18, 1869. 

The Comiug Conventions. 

The currency question, will no doubt have a promi¬ 
nent place in the platforms of party conventions, to be 
held during the next lew months, and the course of the 
parties in these conventions will be closely watched. 
It so happens that the first convention to be held is 
likewise to be the most important. The Republican 
Convention of Illinois, is called for the 17th of June. 
Public opinion in that great State largely coutrols pub¬ 
lic opinion in the entire Northwest. 

The Republican Senators and Representatives of Il¬ 
linois, are strongly in favor of inflation ; the Republi¬ 
can newspapers are on the other side. The mercantile 
classes are in favor of specie payments. The farmers 
are claimed by the inflationists. It is impossible that 
the struggle should not be a severe one. On the one 
side the congressional delegation will desire the approv¬ 
al of those who elect them ; on the other the advocates 
of national honesty will oppose any expression that 
may be cited as favoring the wild-cat policy. 

What would be the effect of a declaration in favor of 
inflation by the Illinois Convention? It would be a di¬ 
rect repudiation of the national Republican platform, 
would absolve every hard money man from his allegi 
ance to the party, and would relieve him of all obliga¬ 
tion to vote for its candidates. We believe that thou¬ 
sands of Republicans would so hold, and would accept 
their release. It would separate the Republican party 
of Illinois from the party in the rest of the country. 
Possibly some other States might follow the example 
of the Empire State of the West, but that would only 
break up the party more completely. If the contest 
for tne control of the Illinois Convention does nothing 
else, it will prove itself a test of opinion in the West. 
A non-committal resolution would be a confession that 
the alleged popular demand for “more money” is less 
vociferous than we have been told it was. And thus, 
in any event, the meeting on the 17th of June will be 
one of the roost significant political incidents of the 
season. The Democratic State Convention in Ohio 
will be another of these battle grounds on the currency 
question. 

The Next Congress. 

The inflationists threaten that they will secure a 
sufficient majority in the next Congress to override a 
veto if the President should still “resist the demands 
of the South and West.” Let U3 look over the ground 
and see what their prospects are for success next fall. 

A two-thirds majority of a whole house consists of 
195 members, and leaves 97 to the minority. New 
England elects 28, and should Gen. Butler secure a re- 
electioD, which i3 not certain, he will be the only in¬ 
flationist who can be elected in either of the six States. 
New York elects 33, and, if inflation or contraction is a 
leading issue in the canvass, at least 30 are safe to be 
sound money men. New Jersey, Maryland and Dela¬ 
ware will send ten others, and a full delegation of six 


more may be expected from the Pacific States. We can 
depend upon 73 members from these 13 States, leaving 
only 25 to be chosen in the West and South, and in 
Pennsylvania, to defeat the project of passing an infla¬ 
tion bill over the veto. What are the chances there? 
Probably a few anti-inflation votes may be picked up 
in the South, but we will reckon without them. Penn 
sylvania and the West return to the present Congress 
thirty democrats. Not one of their districts will be 
carried by theRepublicans and every representative will 
oppose inflation. Thus, without counting one vote in 
the South, and conceding against ail probability that 
all the Western RepubFoans will be for inflation, the 
veto in the House cannot be overcome. 

The assumption that the West is for inflation, has 
been proved false. The Chicago Tribune invited all the 
newspapers in States west of Ohio to define their posi¬ 
tion on the veto. Up to the 13th instant 993 answers 
had been received, of which 514sustained the veto, and 
408 opposed it. A majority of Republican papers 
in the nine States oppose inflation, namely, 295 out of 
529; of the Democratic papers 217 out of 39 are against 
inflation. 

If the Republicans make inflation an issue, they will 
find many a close district sending to Congress a hard- 
money Democrat. But the inflationists seem to have 
forgotten that there are two branches of Congress. 
The Senate changes slowly, and yet in order to overide 
a veto the advocates of more paper money must gain 
no less than twelve seats before March, 1875, which is 
impossible. The changes are far more likely to re¬ 
sult in inflationist losses. These remarks are, however, 
based on the supposition that the hard money men do 
their duty. Their cause can only be lo^tby leaving the 
inflationists to carry out their pL:ns unobstructed. 

The Proposed Convention of Inflationists. 

In regard to the report that a National Convention 
in favor of “cheap money” is to be convened in the 
West early in the coming summer, the Indianapolis 
Journal, Senator Morton’s home organ, says : 

We observe that a statement has gained currency to 
the effect that a National Convention of the friends of 
an expansion of the currency has been decided to be 
held at Springfield, Illinois, about the middle of June, 
when Senator Morton will break ground in favor of a 
new movement, the two principal features of which are 
to be expansion of the currency and cheap transporta¬ 
tion. The opposition papers are commenting a good 
deal on this, and flattering themselves it portends the 
party split for which they are working and waiting. 
Expansion of the currency and cheap transportation 
are both good principles and we hope eventually to see 
the Republican party, through a National Convention, 
take ground in favor of both. But we doubt the wisdom 
or propriety of holding such a Convention as that above spok¬ 
en of, and do not believe anything of the kind has been 
decided on. In our opinion the effect of such a Con¬ 
vention on the Republican party, and on the country 
at large, would almost certainly be bad. It would tend 
to confuse and weaken the party, and openly array the 
West against the East. We are not authorized to speak 
for Senator Morton on the subject, but do not believe 
he is committed to any such movement. 

The Chicago Times gives another version of the 
same story as follows: 

•The repudiationist chieftains—such as Morton, Lo¬ 
gan, Carpenter, and Ferry,—have been compelled, by 
the hearty approval given to the veto in every section 
of the country (excepting the bankrupt States of the 
South), to see that their pretense of representing pub¬ 
lic sentiment on the finance question was an unwar¬ 
ranted pretense. Th?.y have been forced to see the 
fact that, at the most, there is only a minority at the 
West which desires to return to the down-grade of more 
irredeemable due-bills in place of money. The truth 
has been made manifest to them in a way that has had 
a wonderfully cooling effect on their blazing advocacy 
of the cause of the Wall-street gamblers. But shall 
the cause be sacrificed to the pusillanimity of these per 
sons who promised to be i’s champions? The credit- 
gamblers say it 8hall not. Though Morton, Logan, 
Ferry, Carpenter, and twenty like them, have shown 


I the white feather, the gamblers still have friends, and 
“cheap money” is still a cause, defeated in the house of 
its friends, but not conquered by its foes. 

According to the latest advices from Washington, “a 
movement is on foot to hold a convention,” some time 
between now and the November elections, “at StI 
Louis, to consider the question of more cheap money 
and all matters pertaining to the improvement of water 
ways. The proposition is to issue a call for such a 
convention before the adjournment, and set forth the 
reasons for such an assembly.” Another Washington 
correspondent says it is already “decided,” after an 
“informal conference between Southern and Western 
members,” to call such a convention. The Philadel¬ 
phia delegations in the bouse, who voted for the Mer- 
rimon repudiation bill, have been invited to join the 
“cheap-money” convention movement, and have signi¬ 
fied their readiness to do so. The call for the St. 
Louis convention will be tantamount to a declaration 
of war by the repudiationists against the redemption- 
ists. Due-bills vs. money; gambling vs. productive 
labor; this is the issue of the coming contest. It is an 
issue that cannot be averted or avoided. Sooner or 
later, it must be met, and the country must’ fight it out 
on that line.” Let us render thanks to the Wall street 
gamblers and their friends at Washington that they 
have resolved to make the fight in the elections of next 
fall. 

The Pottsville (Penn.,) Miner's Journal adds its 
word as follows: 

We learn from Washington that it is proposed to 
hold a convention of the members of Congress from the 
Western and Southern States and from Pennsylvania, 
at St. Louis, some time during the summer, to unite on 
some policy to secure an increase of national currency, 
sufficient for the wants of the people, and also cheap 
transportation. They very properly ignore New York 
and the New England States, who have, with a mean¬ 
ness unparalleled in the history of any country, voted 
almost as a unit against giving the South and West 
their proportions of currency required to carry on their 
business; while thev enjoy together nearly double the 
quantity they are entitled to based on wealth and pop¬ 
ulation, the true and only true basis on which currency 
ought to be issued. Push it aloDg. The money chan¬ 
gers and Free Traders have committed the overt act— 
they had ample warning, and now let them take the 
consequences. 


Spirit of the Press. 

[Chicago Tribune.] 

A few days since, the Tribune forwarded a circular 
to all the newspapers in Illinois, Indiana, Michigan, 
Wisconsin, Minnesota, Iowa, Missouri, Kansas and Ne¬ 
braska, which are not on its exchange list, asking the 
views of each paper on the veto. The replies are now 
coming in. They vary in tone, from that of the man 
who writes that he is glad to have the opportunity to 
thus put himself on record for hard money, to that of 
the disciple of Logan, who says, with more passion than 
orthography : “Damrn the veto!” The former is the 
more common type. When all the replies to our circu¬ 
lar have been received, we shall print a full list, which 
will give the names of all the papers on both sides of 
the fence and on the fence. It will show that the wall 
of division has been built right through the heart of 
each and every party,—not through the center, for then 
the opposing forces would be equal, whereas there will 
be a heavv majority against the inflation folly and sin. 
Sending out this circular is equivalent to holding a 
convention of a thousand picked men representing all 
parties. Their verdict, we believe, will be for the veto. 
It will show conclusively that the West repudiates the 
repudiators, that CarlSchurz, not John A. Logan, gives 
voice in the Senate to Western thought on finance. 

[Springfield (Ill.) Journal.) 

We believe that nine-tenths of the people of Illinois 
stand ready to indorse, without stint, the vetoed Cur¬ 
rency Bill; and that the approaching State Convention 
will not hesitate, for a single moment, in giving Its 
warmest approval, and in the strongest terms, to our 
Senators and Representatives for their speeches and 
votes upon a measure, about which, among the masses 
in the West, there is scarcely a division of opinion. 
The veto message cannot and will not be indorsed, but 
our Senators and members‘will be. The veto has set¬ 
tled forever the aspiring hopes of more than one gen 
tleman whose wistful glances have been in the direc¬ 
tion of the White House, and we are glad of it. 

[Alton (Ill.) Telegraph.] 

In fact, nearly every old and substantial Republican 
in this section fully indorses the position taken by the 
President in the veto message. It is true, however, 
that there are a few who look at the matter in a differ- 































42 


THE FINANCIAL EE CORD. 


ent light, but the great mass of people, whether Repub¬ 
licans or Democrats, side with President Grant, and 
feel disposed to honor him for rigidly adhering to the 
principles laid down in the platform upon which he was 
elected. 

[Chicago Times.] 

When Madison, Jackson, Clay, Webster, and other 
statesmen of a former day, spoke of paper money as 
th£ most delusive and dangerous financial heresy that 
a people could tolerate,they undoubtedly meant a credit 
currency, which, if not worth 100 cents per $1, would 
not be received in discharge of honest debts. The 
thought never occurred to them that the government of 
the United States might discover a power to make 
promises to pay money, instead of the money itself, a 
legal tender. They never dreamed that the power 
thus to make lawful a system of general swindling ex¬ 
isted as a part of the “war-power," and might be ex¬ 
ercised not only in time of war but in time of peace. 
This discovery remained for a new generation of 
‘‘statesmen,” of whom Morton, Butler, Carpenter, Lo¬ 
gan, Merrimon, Bogy, Pendleton, Niblack, and the 
“silver-tongued" Oglesby may be cited as typical speci¬ 
mens. 

[Chicago Inter-Ocean.] 

General Butler recently returned to the Capital from 
a visit to New England. He says that the politicians 
and the press of that section, which are controlled by 
the capitalists, totally misrepresent the real feelings of 
the people on the financial question. He stoutly avers 
that the people endorse the position of the majority of 
the Republican members of Congress, and disapprove 
of the President’s veto. Whatever people may think 
of General Butler, there is one thing concerning which 
he scarcely ever makes a mistake, and that is, in re¬ 
gard to the feelings and opinions of the masses of the 
people. General Butler is himself in favor of giving our 
small industries one more chance. 

[N. Y. Commercial Advertiser.] 

Inflation is growing weaker. Even in the West 
there is a decided change in public sentiment, as that 
sentiment has been represented. Guns were fired and 
bells rung in Massachusetts when the veto was made 
public. But in the West no public meeting has pro¬ 
nounced against the President; no political organiza¬ 
tion has had an adverse deliverance, and aside from a 
few hot and indignant journals, the bulk of the news¬ 
papers affirm the soundness of the President’s posi¬ 
tion. The people at large accept the same, and infla¬ 
tion may be regarded as hopeless. 

[N. Y. Express.] 

The game before the war ot arousing sectional strife is 
renewed. Before 1861 it was upon the slavery issue; 
and now it is the currency. To this end paper money 
is assumed to be peculiarly a Western and Southern 
interest, and a sound currency an Eastern interest, 
which is the same as to say that square dealing is only 
an Eastern virtue, and juggling is held to be a West¬ 
ern desire. But the West has not half the inflation 
ideas credited to that section. The newspapers are a 
fair reflex of public opinion, and all the great and influ¬ 
ential journals of the West sustain the veto, and a ma¬ 
jority of the newspapers of all kinds are on the same 
side. Business men of sagacity in every State are in 
favor ol honest money, and it is only the speculators 
and debtors who favor a dishonest currency. 

[Richmond (Va.) State Journal.] 

The great issue before the country is whether the 

PEOPLE SHALL HAVE THE RIGHT TO USE THEIR OWN 
CURRENCY WITHOUT PAYING SUCH A TRIBUTE TO THE 
FEUDAL LORDS OF FINANCE AS TO EXHAUST ALL THE 

gains of industry and trade ? Our present finan¬ 
cial system works the ruin of the people. It must be 
radically reformed by making the currency sound, and 
removing all unjust restrictions upon its use. The 
legal-tenders should be made convertible into bonds 
and made receivable for all dues. The national banks 
should be compelled to redeem in coin, or wind up. 
Speculative sales of gold should be taxed. The nation¬ 
al currency should be issued to all citizens on equal 
terms and without arbitrous limits. 

iVo man should bp elected to Congress from Virginia 
who does not hold substantially these views. 

[St. Louis Republican.] 

The veto of the currency bill has developed with 
startling rapidity one very satisfactory fact, that neith¬ 
er the West nor the South, which we believed to be 
the strongholds of inflation, desiied the success of any 
such policy. 

[New Orleans Picayune.] 

We are surprised that the New York Herald should 
represent that the press of this city had observed a 
cautious neutrality and indifference on the question of 
the paper currency. This paper never failed to oppose, 
in the most emphatic manner, the bill recently vetoed 
by President Grant. The return to specie payments 
at as early a date as possible, and the reduction instead 
of the increase of paper currency, has been our invaria¬ 
ble policy. It is eminently the true and wise policy for 
the cotton producing section of our country. No in¬ 
terest has been more seriously affected by the substitu¬ 
tion of a depreciated for the par currency of the world, 
than that of the cotton producer. That an increase of 
currency is not needed in this city is pretty satisfac¬ 


torily shown by a statement published in the Herald, 
as emanating from Mr. Oglesby, of the Louisiana Na¬ 
tional Bank, that during Ins long residence in this city 
he has never known so large a plethora ol currency in 
the banks. The difficulty is to employ that currency, 
in the lamentable absence of confidence and credit, and 
of good securities upon which loans could be made. 

[Cincinnati Enquirer.] 

The letter of Senator Morton to the Indianapolis 
Journal relative to the Einancial Bill should be suffi¬ 
cient to veto the veto of the President. It is a clear, 
concise and unanswerable defense of the vetoed bili, 
and though the Senator does not directly criticise the 
President’s action in withholding his consent from the 
bill, he arraigns him by indirection most effectively. 
Mr. Morton writes the letter ostensibly to correct a 
misapprehension concerning the first section of the bill, 
the one relating to United States notes. 

[Chicago later Ocean.] 

The proposition to fix a day tor the resumption of 
specie payments is an impertinence. Congress has no 
right to attempt to produce a moral effect where it can 
do no binding act. The proposition is not merely an 
impertinence; it is an absurdity. To resume specie 
payments, the money must be in the Treasury with 
which to resume. The present Congress has no know¬ 
ledge of what the condition of the - treasury or of the 
country will be on the 1st day of January, 1877. 

[Wilmington (N. C.) Journal.] 

Indeed, the consolidation of the West and South into 
the governing authority of the country appears to be 
the probable product of this vote on the currency bill. 
The growing divisions in New England,and the lamenta¬ 
ble decay of public spirit in Massachusetts,as exhibited 
in the recent history of many of her public men,conspire 
with the growing habit of independent thinking in the 
West to make an opportunity for this transfer of pow¬ 
er. 

[Toledo, (O.) Blade.] 

The President may veto every measure adopted by 
Congress for the relief of the people but he should not 
be ignorant of the fact, that, under such a policy, the 
next Congress will be strong enough to set aside vetoes. 
There is not a Congressional district in the Middle, 
Western, and Southern States which will not send un¬ 
qualified currency expansionists to the next Congress, 
unless the present Congress succeeds in affording such 
relief as will secure business prosperity to the country. 
This is not idle talk; neither is it a threat. It is only 
the statement of a fact which is justified by the expres¬ 
sions of public sentiment. 

[Cleveland Leader.] 

While there would appear in Illinois, to be a clear 
and unequivocal majority against inflation, there is 
also evidence that the anti-veto wing of all parties, if 
united on that issue, will be sufficiently strong to be 
worthy of account. The Illinois Convention will there¬ 
fore be an event to be watched with interest. We do 
not believe that the inflation sentiment is to any large 
extent strong and determined enough to carry men out 
of the old party lines into a new organization which 
must be from the first only a minority. 

[Cincinnati Gazette.] 

It would be strange if this government should provide 
any contrivance for shuffling with bonds and green¬ 
backs and coin, to be manipulated at the option of the 
Secretary of the Treasury, and whose working it is im¬ 
possible to calculate. When government shall conclude 
to contract its currency notes in order to come to specie 
redemption, there is a straightforward way to do it, 
and that is by providing a surplus of revenue, and re¬ 
tiring a certain amount of greenbacks as they come 
into the Treasury for public dues. 

[Philadelphia Press.] 

The New York Times of April 30 prints a significant 
letter on the condition of business in Western Pennsyl¬ 
vania, in which we find the opinions of a number of 
leading iron men. Their testimony is impressive and 
impartial, and deserves a special notice. The currency 
bill vet ed by President Grant had but little interest to 
them. They did not desire any increase of an irre¬ 
deemable currency, but they stand as a unit in favor 
of an elastic currency, founded on a comprehensive sys¬ 
tem of free banking. All coneurre i in this, and every 
one of them said that the selfish policy of New York to 
the East would finally force a combination between 
the West and the South. 

[Milwaukee News] 

The United States government cannot afford to wa¬ 
ter its currency, nor to consent to any insidious or fraud¬ 
ulent method for flooding the country with vast issues 
of irredeemable paper and bank notes. Such a policy 
would be ruin to all the material and moral interests of 
the people. It would breed a disregard of solemn obli¬ 
gations, a love of bad faith, and a reckless intolerance 
of honesty alike in public and private affairs which 
would cause countless disasters to the business and the 
general public. Every property holder and tax payer 
in the land would meet in such a policy, in the inflation 
of the currency policy, the guide that* would lead him 
to bankruptcy and financial helpnessness in the end. 
Of such a nature, tending toward inflation and ,repudi¬ 
ation, are all, or nearly all, of the financial schemes 
and compromises before Congress. They are all a piece 


of the inflation sausage cut from the repudiation dog. 
They are a chimera and a swindle. No law, policy or 
regulation can make money where no value exists. 

[Milwaukee Wisconsin.] 

Since the promulgation of the President’s veto, there 
has manifestly been a change for the better in the tone 
of public opinion on the financial question. Persons 
who were crying out blindly for more irredeemable le¬ 
gal-tender notes have been constrained to pause, and, 
in their sober second thought, have come to better con¬ 
clusions. They perceive that the issue of more irre¬ 
deemable government paper means repudiation, dis¬ 
honor, and ultimate bankruptcy to every legitimate 
business interest. 

[Baltimore American ] 

A man who maintained the constitutional rights of 
slavery, and shared in armed resistance to the nation, 
may have the capacity to mark and detect a rogue that 
would render him valuable as a reformer. There is 
enough honesty and intelligence struggling against so¬ 
cialism and misrule in the South to be a valuable sup¬ 
port to the Republican party, and their cooperation 
would tend to destroy all disaffection and encourage 
a feeling of amity and good will. The inflation raid has 
its uses, and if it effects a rearrangement of party lines 
the purifying effect on our politics would be very 
great. 

[Buffalo Commercial Advertiser.] 

It is evident from the provisions of the numerous 
bills now brought to the attention of Congress that the 
majority are inclined to be much more reasonable than 
they were before the veto. Even Mr. Butler is willing 
to withdraw a certain proportion of the legal-tenders as 
the new bank notes are issued, and he will not object 
to naming a period for the resumption of specie pay¬ 
ments. This is certainly a very agreeable change of 
purpose on his part. In the last debate he would listen 
to nothing that did not inflate the currency; the very 
sound of resumption was painful to his ears. 

[Hartiord Courant ] 

The new Senate Finance Bill would accomplish an 
inflation to begin with, and provide for a continual in¬ 
flation. Instead of retiring the $26,000,000 issued by . 
Secretaries Boutwell and Richardson without authori¬ 
ty of law, it legalizes this issue, by fixing the maxi¬ 
mum of greenbacks at $382,000,000. This is wrong, 
utterly wrong in principal, and it sanctions conduct 
that is exceedingly dangerous to the nation. If this 
departure from common-sense and law is condoned and 
evenJegalized, there is nothing to prevent the Secreta¬ 
ry of the Treasury from treating the reduction of the 
greenbacks (provided for in the bill) as a “reserve” 
and reissuing the canceled currency whenever he wants 
to move either the crops or an election. Again the bill 
provides for direct inflation of the currency. It per¬ 
mits the issue of paper money in the shape of bank 
notes, and provides for the retirement of only half as 
many greenbacks as are issued of bank notes; so that 
inflation goes on; and in its effect upon the business 
of the country the inflation of one kind of paper is as 
bad as another. 

[ Warrensburg (Mo.) Standard.] 

Since the veto, the price ot cattle, hogs, grain of all 
kinds, and all farm products have advanced in all the 
leading markets of the country. All legitimate State 
and railway bonds have either advanced or stood firm. 
On the other hand, all fancy stocks and wild-cat securi¬ 
ties, such as the sports of Wall street so delight to dab¬ 
ble in, have gone down. All of which proves what ev¬ 
ery political economist knew before, that the necessity 
of the farmer and sound business manisooorf, not wat¬ 
ered money. Stick a pm here, and remember that “An 
inflated currency is not the spade of the husbandman, 
but the dice of the gambler.’’ 

[Detroit Tribune.] 

The proposition to appreciate the value of green¬ 
backs toward par in gold (and thus remove the chiel 
obstacle which has prevented the resumption of specie 
payments) by making the legal tender notes converti¬ 
ble, at the will of the holder, into Government bonds, 
bearing sufficient interest to make them worth their 
face in gold, seems to be meeting with favor in Wash¬ 
ington. The idea is not a new one—indeed, as many 
readers will remember, the first greenbacks ever issued 
by the Government were made redeemable in United 
States gold bearing bonds—but it had escaped atten¬ 
tion or discussion during the late long debates upon the 
currency, until revived by Mr. Colfax in a letter pub¬ 
lished last month in the Chicago Advance. The practi¬ 
cal advantage claimed for it is that the greenback, be¬ 
ing made redeemable in a bond worth its face in gold, 
would itself appreciate to an equality in value with 
gold. This equality in value being attained as a mat¬ 
ter of fact, the Government could resume specie pay¬ 
ments absolutely, without danger of a “run,” as the 
people would prefer greenbacks to the gold, if their 
value was thus guaranteed. 


Sound Doctrine from Kansas. 

The Kansas Democrat, published at Independence, 
gives its readers this good statement of the case as seen 
by Democrats in that region : 

So long as our currency continues irredeemable, 









THE FINANCIAL RECORD. 


43 


there is a powerful temptation for the debtor class to 
depreciate the currency by inflation in order to give 
their creditors less value. This is just the demand the 
inflationists now make. Powerful interests in the 
South and West urge it, and as most of the great rail¬ 
roads are heavy debtors, their influence is on the same 
side. The national banks also stand in the way of a 
sound currency, and it will be seen that the temptation 
to plunge deeper into the abyss of paper money is very- 
strong. In truth, every interest of the masses is jeop¬ 
ardized by this demand; it threatens to wreck our 
good faith as a people, and impels us onward in a di¬ 
rection where lies wide-spread ruin, bankruptcy as a 
people, and an amount of suffering and hardship almost 
inconceivable. Our dangers may all be traced to their 
source in several fatal errors of the past: 

1. The attempt to dispense with the necessity of 
raising money by taxation at the commencement of 
the war, by making paper promises a legal tender. By 
this means the government wholly dispensed with mon¬ 
ey proper; discarded it, and substituted for it the cred¬ 
it of the nation. 

2. The vesting in Congress power to control the cur¬ 
rency at will. This is an absolute power over the bus¬ 
iness of the whole people,—a power which no govern¬ 
ment ought to possess or can safely exercise. 

3. The creation of a vast moneyed monopoly strong 
enough to control Congress. 

It remains to be seen whether we can avoid the con¬ 
sequences of those errors and reach a sound currency 
by normal measures, or whether we shall embark on 
an endless sea of paper to land in final repudiation, and 
national and individual bankruptcy. 

Tli© Best Currency. 

[From the speech of Senator Jones of Nevada ] 

A COLLOQUY ABOUT GREENBACKS. 

Mb. Morton. Let me ask my friend a question. 
Nevada, I believe, is a State in the Union, and yet 
Nevada refused to accept that which the Congress of 
the United States did make a legal tender, and the 
legal-tender currency of the United States has been 
persistently rejected both in Nevada and California. 

Mr. Jones. The people of Nevada were honest 
enough to do this : When a man agreed to pay a cer¬ 
tain sum in gold and silver, which were worth more 
than greenbacks, they forced him to do it. They were 
unable to see bow the Government could be assisted by 
allowing a debtor to plunder his creditor. It is one of 
the glories of that State, and one of the glories of that 
coast, that debtors there were never permitted to plun¬ 
der their creditors, as it seems to me is sought to be 
done here at this time. 

Mr. Morton. Will the Senator allow me to ask a 
question right there? 

Mr. Jones. Certainly. 

Mr. Morton. I ask him what would have become 
of our country if all the States of the Union had fol¬ 
lowed the example of Nevada and rejected the legal- 
tenders ? 

Mr. Jones. We should have put down the rebellion 
for fifteen hundred millions less money than it did cost. 

Mr. Hamilton, of Maryland. That is true. 

Mr. Jones. That is what would have happened to 
this country. And more than this, we should have 
been spared ail the embarrassments and uncertainties 
which have nearly overwhelmed us during the past 
nine years. We should have saved since the close of 
the war a hundred millions a year, and prevented un¬ 
told disasters yet to come if we do not retrace our steps, 
and which will, as I believe, imperil the honor and 
prosperity of the country. Why, sir, if the opportu 
nity the war gave us to issue the greenbacks had been 
denied us, and if such great benefits, as some seem to 
think, have flowed from such issue, I tremble at the 
contemplation of the condition we should have been in 
if peace had continued, and the glorious opening had 
been lost to us forever; for with the increase of popu¬ 
lation and the alleged necessity of a certain amount of 
money per capita, we never could have owed enough 
on which to do our business. 

Now, sir, what did happen? Ignoring the history 
of other nations; taking no warning from the wrecks 
of false financial systems strewn along their pathway, 
the first thing we did was to make irredeemable paper 
a legal-tender, and thereby almost immediately ad¬ 
vanced the price of everything 100 per.cent. Having 
thus made everything we were compelled to buy dou¬ 
ble its former price, we then entered upon the negotia¬ 
tion of loans and a rigorous system of taxation to raise 
money with which to buy. This we should have done 
in the start, and what we could have done; but we 
first thoroughly demoralized the whole country and all 
its industries ; we plundered the creditors and allowed 
the debtors to discharge their obligations by paying 
from 30 to 50 per cent, less than they owed, and then 
we started to raise money for putting down the rebel¬ 
lion in the only way we should have done in the com¬ 
mencement. We resorted at the outset to measures 
condemned by financiers everywhere; to that which I 
would only have been willing to do at the last extrem 
ity. When every dollar had been raised that could be 


raised by taxation ; when every man had been put into 
our ranks that couid have been forced into them by 
conscription, then, as a last resort, I would have agreed 
to the issue of irredeemable paper money. A great 
war cannot be carried on by pieces of paper payable at 
convenience and bearing no interest. This paper cur¬ 
rency, instead of addins? strength to the imperiled 
country, was a source of weakness. Its issuance was 
an impeachment of the patriotism of the nation, and an 
underrating of the resources of the country. It was a 
cheat upon the people in teaching them the pernicious 
idea that, in carrying on a great civil war economy and 
industry were not necessary ; that production and de¬ 
struction were convertible terms ; and that the activity 
of the printing-press in the production of paper money 
would amply compensate for the activity of armies in 
the destruction of wealth. 

Mr. Morton. I will say to my friend that his posi¬ 
tion is consistent, inasmuch as he regards the green¬ 
back as a curse from the beginning. 

Mr. Jones. I do, most undoubtedly, and I further 
believe that it is the duty of men to face that question. 

I know that the loyal people of the United States have 
been disinclined to discuss the morality or wisdom of 
the financial measures of the Government inaugurated 
during the rebellion. So joyful were they with the 
thought that we were able to put it down at all, that 
they have not cared to scrutinize the means by which 
it was suppressed. But it seems to me, if “history is 
philosophy teaching by example,” it is the duty of this 
body to investigate the subject, so that in case another 
rebellion shall arise, we may see whether the last one 
was not put down at about double the cost that need 
to have been incurred. It seems to mo that it was, 
and that the experience of the past is the best light to 
guide our footsteps in the future. 

PAPER MONEY DESCRIBED. 

What does a piece of this Government paper say— 
this paper that the honor of the Government is pledged 
to redeem, and which the custodians of that honor re¬ 
fuse to redeem and refuse to take any steps toward re¬ 
deeming ? It says : “The holder of this piece of paper 
has rendered a service unto society of an uncertain, un¬ 
ascertained, and unascertainable value, dependent en¬ 
tirely upon the precise day of the week or month when 
such service was rendered, and is entitled to such ser¬ 
vice in return as the ‘bulls’ and ‘bears’ of Wall street, or 
a vote of the Congress of the United States, or both, 
may determine.” [Laughter.] 

We are told that money is the utensil of trade; that 
it is the tool of the workman. Well, sir, it seems to 
me that our present currency, ins tead of being the spade 
of the husbandman, is the dice-box of the gambler. 
[Applause.] 

It is said that it is the grease that lubricates the 
wheels of commerce. Well, sir, this irredeemable paper 
money is a sort of grease that makes the hub expand, 
the spoke expand* and the axle expand. At one mo¬ 
ment the grease spurts out on everybody, and the next 
this wheel without a tire is running dry on its axle 
[Laughter.] Another difficulty is that the driver is too 
often diverted from the management of his wagon to 
speculation in the rise and fall of the grease. 

The money which consists of paper promises cannot 
be a standard of value. It measures nothing but the 
average hopes, fears, confidence, and doubts of this peo¬ 
ple as to the ability and intention of their Government 
to ultimately redeem it in gold, and is itself'measured 
by gold. It finds its way into the pockets of speculators 
and gamblers, who win it, rather than the pockets of 
the laborers who earn it. 

Mr. Morton. I will ask my friend a question. He 
talks about gambling. I will ask him if there has not 
been as much gambling in California and Nevada in 
the last ten or fifteen years as in any other State in the 
Union ? 

Mr. Jones. The people there buy what they think 
is valuable and likely to increase in price, and if they 
have anything which they tear will fall in price they 
sell it. " W T e have never had any money panics. We 
have never called upon the Congress of the United 
States to relieve the gambler from any portion of his 
liabilities, or to issue more money iD order that he 
might more easily pay his debts. [Applause.] 

The speculators in Calfornia are debtors, as they are 
on this side of the mountains. They and thej' alone 
are demanding an increase of the currency. 

HOW TO RESUME. 

Gentlemen ask, “How will you get the gold with 
which to resume specie payments?” As a general pro¬ 
position, I would say that the Government should 
hoard gold ; that it should take no part in the gold 
gambling of this country. I admit it would be a great 
injustice to the debtor to say that specie payment shall 
be resumed immediately, because he contracted his 
debts when currency was worth about what it is tc« 
day, and it would not be just to make him pay in an 
appreciated currency. But he has to pay some time. 
I would put it off three years, and say that on the 1st 
day of January, or the 1st day of July, 1877, the green¬ 
backs, the national legal-tenders, should be redeemed, 
either in bonds or in gold, at the option of the Govern¬ 
ment, and destroyed, and at the same time I would re¬ 


peal the legal-tender clause as to all debts contracted 
after that time. This would be contraction, and would 
cause a reduction in ihe price of everything. Without 
such contraction the maintenance of the specie stand¬ 
ard would be impossible. The effect of that would be 
to make the condition-precedent to a return to specie 
payments. Unless we make these conditions-prece- 
dent, unless we fix that time certain in the future, the 
people will never commence to prepare for it, and will 
never be more ready than they are to-day. 

It is as though you were owing a certain debt and 
you asked your creditor when you should pay it, and 
he should say, “Well, pay it by and by ; pay it almost 
any time.” The debtor is never ready to pay a debt 
when that is the understanding. But if you are told 
the exact time when the debt is to be paid, you will 
put your house in order and get ready to pay if. If you 
will fix a time for resumption, it will not be the Gov¬ 
ernment alone that will resume; that will be the least 
and easiest part of it. Besumption will take place on 
the part of the people of the country. If the Secretary 
of the Treasury alone were to redeem, he would be a 
shining mark against whom all the banking houses of 
the world could make their combinations, and Wall 
street would assist in the work. They could and would 
make corners on him in gold, but they could not make 
corners on forty millions of people. When the people 
knew that gold was to be the currency of the country 
at any stated time, each man would have his little 
amount of gold, and it would flow into the country in 
a thousand Pactolian streams. There would be no 
doubt about it. The people would be ready. Gold 
will be found all over this country when you do not 
banish it; when you permit it to circulate ; when you 
give its true function. 

TnE SITUATION AT THE SOUTH. 

Perhaps the South, which - has, within a few years 
experienced a great change in its whole social fabric, 
has not yet entirely adjusted it elf to the conditions I 
have named. It would be strange, indeed, if it had. 
But the sooner its people see in them the way to suc¬ 
cess, the sooner they w'ill see the dawn of returning 
prosperity. 

Loans upon uncultivated lands have never been con¬ 
sidered very desirable investments, more than upon 
salubrious climate or unutilized water courses. The 
long loans which may be required to enable well-applied 
industry to anticipate at times the products of its fields, 
would never be extended by the banks of circulation 
now asked for. These must come from savings-banks, 
which require no charter from Government, but are the 
outgrowth of an industrious and economical people. 
The land-owners of the South, though they fully real¬ 
ize that slavery is abolished, do not yet appreciate the 
new requirements of the great change in their indus¬ 
trial system. They have yet to learn that land alone 
is not productive enough to pay interest on nearly its 
value, besides wages and profits. Thefarmer must ab¬ 
solutely owm the land he cultivates and must not be at 
the mercy of money lenders. His true way to get money 
is by the sale of so much of his land as will enable him 
profitably to cultivate what is left. What avails it for 
the owner of two or three thousand acres of land to do 
nothing and say, “Well, it is a singular thing we have 
not more money ; we ought to have more money,' be¬ 
cause we want to hire somebody to work, and we want 
the money’ to use as capital.” If they want money’ 
very badly, they should, as I have said, sell some ot‘ 
their land. Let them sell at present prices, if they can ; 
if they cannot, they should reduce the prices until 
somebody besides themselves shall see that it is a good 
bargain and be induced to buy. That is the way they 
do the world over. 

The refusal of men with money to buy property ct 
the extravagant estimate of its value by r the owner is 
no evidence of hard times or of the scarcity of money. 
Money is plenty enough to buy things at their actual 
value, but the buyer must ave something to say about 
the price he will give. It really seems childish for 
people to hold on convulsively to land and other prop¬ 
erty at double price, and then wonder that with them 
money is scarce and hard to be obtained. Money 
would have to be plentiful indeed, and correspondingly 
cheap and worthless, if sellers alone were to fix the 
amount they should receive; that is to say, if a man 
with something to sell were to make the bargain for 
both sides. That is what is the matter in this country 
to-day. You have property inflated to a tremendous 
pitch, and the cry that comes here for more money 
means about this: “We are worth so much property; 
our land is worth so much, and we know it; but we 
cannot find anybody with money who is foolish enough 
to give us our price.” Come down with your prices 
and you will find plenty of money. You never will 
find anybody with money who will give it to you. The 
man who would be foolish enough to give present prices 
for property would not have any money long. He 
would soon get rfd of it. 

INVESTMENT AND INTEREST. 

With this redundancy of money, the financial reports 
of the market showing that it is a drug in New York, 
commanding but 4 or 5 per cent, and equally plenty in 
every commercial center of the United States, the bor- 













44 


THE FINANCIAL RECORD. 


rowers dictating almost their own terms, liow is it that 
this money does not seek the great opportunities for in¬ 
vestment which we are assured are to be found in the 
Southern and Western States ? 

I was talking a day or two since with a distinguished 
gentleman from a Southern State, and said to him, “You 
have a great deal of money and you live in that sec¬ 
tion ; what do you do with your money ? You say you 
want more money in your region.” He answered, “I 
have my money invested some in Central, and so on,” 
naming a variety of stocks. “But,” said I, “why do 
you not place your money in those investments that 
you say promise such great returns V’ “Well,” replied 
he, “I do not want any of it myself, but I am in hopes 
that somebody will go down there with money and in- 


| vest it in that way. None of it tor me, because there 
is no security.” [Laughter.] 

Gentlemen will learn by and by that high interest 
and scarce money, if there are synonyms in the lan¬ 
guage, mean bad security. That is just what they 
mean and nothing else. The only way to be in a con¬ 
dition to give security and obtain money thereon in a 
community is by industry, by labor, by obedience to 
law, by thrift, and a careful husbanding of resources. 
Why, sir, in any congressional district in the United 
States, if men will be industrious and will save their 
money, and can operate on some legitimate financial 
basis, two, three, or four years are sufficient to make 
money plenty in that section. 

PRICES INFLATED FOR FARMERS. 

I say to the farmers and planters of the South that 


the fluctuating currency they are using increases the 
price of everything that goes into the production of 
their crops, while everything they produce is paid for 
at prices regulated by the price of gold. 

It is a suggestive fact that the average price of wheat 
has been less for the last three years than it was for the 
three years prior to 1861, and the same is true of near¬ 
ly all the principal products of the soil. Thus the farm¬ 
er is not benefited by high prices in any particular 
whatever. He is cheated all the time. Then the man¬ 
ufacturer, by overproducing, finds himself in debt with 
a large amount of goods on hand—a large amount of 
estimated values ; but if called upon suddenly, as he is 
apt to be in these panics, for money, he cannot respond, 
he cannot sell, because the country is already supplied 
and the market overstocked under the unhealthy stim¬ 
ulus of our diseased financial system. 


FINAL NOTICE. 


Hutcrim ikiml Sticwt Ussariation, 

Boston, May 15, 1874. 

The customary General Meeting of the Association will take place this year at New York, from the 19th to the 23d of May. The 
persons engaged to read papers, with their subjects, and the order of business, so far as determined upon, are as follows : 

first session. (Tuesday, May 19, 7.30 p. m.) 

An Address by the President, George William Curtis, Esq. 

A Paper by Rev. Dr. Woolsey, of New Haven, on The Exemption from Capture of Private Property upon the Sea. 

A Paper by Cephas Brainekd, Esq., of New York, on The Social Science Work of the Young Men’s Christian Association. 

A Paper on Financial Administration, by Gamaliel Bradford, Esq., of Boston. 

second session. (Wednesday, May 20, 3 p. m.) 

A Paper by Willard C. Flagg, Esq., of Moro, Ill., on The Farmer's Movement in the Western States. 

A Paper by President D. C. Gilman, of the University of California, on California and its Relations with the other United States. 

third session. (Wednesday Evening, 8 o’clock.) 

A Paper by D. A. Wells, Esq., on Rational Principles of Taxation. 

A Paper by Prof. Benjamin Peirce, of Cambridge, on Ocean Lanes for Steamship Navigation. 

A Paper by Gardiner G. Hubbard, Esq., of Boston, on American and European Railroads. 

fourth session. (Thursday, May 21, 3 p. m.) 

A Paper by Dr. J. Foster Jenkins, of Yonkers, New York, on Tent Hospitals. 

A Paper by Dr. Alfred L. Carroll, of New York, on Hygiene in Schools and Colleges. 

A Report from the Health Department. 

fifth session. (Thursday Evening, 8 o’clock.) 

A Paper by Hon. Charles A. Buck ale w, of Bloomsburg, Pa., on The New Pennsylvania Constituuon. 

A Report from the Finance Department, by Prof. W. G. Sumner, of New Haven. 

A General Discussion on Financial Questions. 

sixth session. (Friday, May 22, 3 p. m.) 

A Report by the General Secretary, F. B. Sanborn, on The Work of Social Science in the United Staies. 

A Report from the Department of Social Economy, on Pauperism in the City of New York. 

A Paper by Z. R. Brock way, Esq., of Detroit, Mich., on The Reformation o f Prisoners. 

A Paper by George. T. Angell, Esq., of Boston, on The Protection of Animals, Especially in Transportation 

seventh session. (Friday Evening, 8 o’clock.) 

A Paper by Hon. Andrew D. White, of Cornell University, on The Relation of National and State Governments to Advanced Education. 

A Paper by William W. Greenough, Esq., of Boston, on Public Libraries. 

A Report from the Department of Education. 

At the First and the last Session the President (Mr. Curtis) will occupy the Chair, Dr. Woolsey will preside at the Second Session, and Me. D. 
A. Wells at the Fifth Session. Hon. William E. Dodge is expected to preside at the Third Session, Jackson S. Schultz, Esq., at the Fourth, 
and Rev. Dr. Potter at the Sixth. A few persons will be invited to discuss each paper in speeches of ten minutes each. On Wednesday, May 20, 
at 10 a. m., there will be a Conference of the Public Boards of Charities in the United States, and a conference of Boards of Health on Thurs¬ 
day, May 21, at the same hour, (Hon. Dorman B. Eaton in the chair ) It is proposed also to hold a session of the Boards of Health and of Pub¬ 
lic Charities united on Friday, May 22, at 10 a. m. Delegates from the State Boards of Public Charities of New York, Pennsylvania, Massachusetts, 
Connecticut, Michigan and Wisconsin, have promised their attendance, and it is hoped that all the Boards in the country will be represented, eith¬ 
er by delegates or by letters. Among the subjects which will be brought before the Conference on Wednesday, for consideration, will be : 

I. The Duty of the States Toward Their Insane Poor. (Dr. John Ordronaux, of New York, will discuss thisj 
II. The Laws of Pauper Settlement, and the Best Method of Administering Poor Law Relief. 

III. The Prevention of Pauperism. (Dr. S. G. Howe and others to discuss this.) 

In connection with this second topic a report from the Jurisprudence Department on The Poor Laws of Massachusetts, will be presented. 

Subjects suggested for the Conference of Thursday are these : 

I. The Proper Organization of Health Boards. (Hon. D. B. Eaton is expected to discuss this.) 

II. The Powers and Duties Proper to State Boards. 

in. The Powers and Duties of City Boards. (Dr. Stephen Smith is invited to discuss this.) 

IV. Vital Registration, and the Proper Use of Vital Statistics. 

It is expected that Dr. Elisha Harris, of the New York City Health Department, will read a paper on the last named topic. 

All the Sessions and the Conferences of the Boards of Health and Public Charities will be held at the Hall of the Young Men’s Christian 
Association, corner of Fourth Avenue and 23d Street. The Executive Committee will meet at the same place on Tuesday, the 19th, at 3 p. m.' 
Members of the Association will please report themselves, with their address in New York, upon their arrival at the Hall. The General Secretary 
may be addressed there from and after Monday the 18th inst., and all communications, abstracts of papers, etc., should be sent to him there. 












FINANCIAL RECORD. 

“WE NEED ONE THING BESIDES MORE MONEY, AND THAT IS BUTTER MONEY.'’-Ne»iOi-or Zacli. Chandler. 

VOL. I. FRIDAY, MAY 22, 1874. NO. 16. 


The Financial Record will be continued until further no- I 
tlce and will be sent free of postage, to all persons who will re¬ 
mit 60 cents to the publishers. All editors who receive it are 
invited to send their papers in exchange. It will be no longer 
ublisbed by the American Social Science Association, 
ut for the present, as heretofore, communications respecting it 
may be addressed to the Secretary of the Association, F. B. San¬ 
born, No. 5 Pemberton Square, (Room 21,) Boston; and all ex¬ 
change papers, public documents, etc., may be forwarded to the 
same address. 


National Promises. 

“The United States will pay bearer one dollar.” 

United. Stales legal tender-note. 

“The gold coins of the United States shall be a one 
dollar piece, which, at the standard weight of twenty- 
five and eight-tenths grains, shall be the unit op 
Value.’’ — Act of Congress, February 12, 1873. 

“The United States solemnly pledges its faith to 
make provision, at the earliest practicable period, for the 
redemption of the United States notes in coin,”—Act 
of March 18, 1869. 


urged that the city papers make up the preponderance | 
of opinion on the side of good money; both city and 
country are in favor of the veto. 

Since last week the census has been made more per¬ 
fect, and the list now includes the names of 965 news¬ 
papers in nine western States. Of these, only eleven 
have no opinions on the currency question, while 531 
support, and 423 oppose the veto. We append the 
classification of these newspapers by States; 

On the 



Sustain. 

Oppose. 

fence. 

Illinois . 


119 

9 

Indiana. 


77 

. . 

Michigan. 


25 

. . 

Wisconsin. 


28 

1 

Minnesota _ 


7 

. . 

Iowa. 


69 

. . 

Kansas... 


59 


Nebraska. 


33 

. . 

Missouri. 


8 

1 


531 

423 

11 


The Spirit of Congress. 

Our record for the past week covers only the passage 
of a new currency bill by the Senate. It is certain 
that the House will not pass this bill as it was passed 
by the Senate, and equally certain that the President 
would not sign it if it were agreed to in its present 
form. As a matter of record we note the features 
of the bill as passed by the Senate. It removes all re¬ 
strictions on the amount of national bank circulation, 
abolishes reserves on circulation, but requires the de¬ 
posit of five per cent, of the circulation in the treasury 
for the redemption of notes, and requires all banks to 
keep their entire reserves in their own vaults. It per¬ 
mits banks to withdraw their bonds on the presentation 
of legal tender notes, and an amount of the notes of 
such banks,equal to the greenbacks deposited with them, 
will then be destroyed ; it fixes the maximum of legal 
tender circulation at $382,000,000, which is to be reduc¬ 
ed $250,000 on the issue of each $1,000,000 additional 
bank note currency, legal tenders to be obtained by the 
sale of bonds. After the 1st July, 1868, legal tenders 
are to be convertible into fifteen year four and a half 
per cent, bonds, but the greenbacks so converted shall 
be reissued either to purchase or redeem the public 
debt at par in coin or to meet current expenses, but 
the Secretary of the Treasury may redeem the legal 
tenders in gold instead of in bonds. 

The debate on the bill was not interesting. Mr. 
Washburn, the successor of the late Mr. Sumner, made 
an excellent speech in favor of hard money, and voted 
on every question on th6 same side. The inflationists 
had everything their own way, and rejected among other 
propositions, one to take away from the Eastern States 
a large part of their present bank circulation instead of 
removing all restrictions on the quantity. The only 
question with them was, how far it would be safe to 
go so as not to incur the risk of another veto. The 
general belief is that they overshot the mark. 

The bill went back to the House, and was, on Mon¬ 
day, referred to the banking committee, with leave to 
report at any time, but it has not yet been reported. 
Active negotiations have been in progress, in which 
Speaker Blaine has taken an active part, to secure such 
amendments to the bill as will ensure its acceptance as 
a compromise and its approval by the President. 

The Voice of the West. 

The Chicago Tribune's census of newspaper opinion 
at the West, is one of the most valuable contributions 
to the hard money cause for a long time. It disposes 
completely of the falsehood that the West is for infla¬ 
tion. It shows that the constituents of Senators Logan, 
Ferry, Carpenter, Morton, and the rest of the inflation¬ 
ists of that section, are not so ignorant or so deluded 
as those gentlemen have supposed. It is untrue to say 
that the majority is made up of Democratic jour¬ 
nals; both parties sustain the veto. It cannot be 


The Currency Problem. 

[We print below the remainder of the Instructive letter of Mr. 
B. F. Nourseof Boston to a gentleman luSt. Louis, the first por¬ 
tion of which was printed in the secoud number of the Rec¬ 
ord.] 

A little reflection will teach any business man that it 
is not the amount of currency of any kind, which may be 
in issue, that causes higher or lower interest, or that 
promotes or retards business enterprise and activity. 
It is the demand for, and use of the currency, or the 
lack of these that is the test. Money is often abundant 
and cheap from stagnation in business, as after a great 
financial crisis; and again very dear and scarce when ac¬ 
tivity and apparent prosperity prevail. In dr ue, of 
course, cheapness of money will create demand and 
use for it; and as these increase, the rates of interest 
will rise, and thus it may happen, and when the supply 
of currency is excessive probably will happen, that ex¬ 
cessive supply of currency becomes the cause of its own 
subsequent scarcity and high interest, through the infla¬ 
tion and speculation it promotes. When the currency is 
irredeemable, it may be taken as an axiom that its exces¬ 
sive issue will produce high rates of interest. The ex¬ 
cess above the amount which is just enough comforta¬ 
bly to perform the business exchanges of the country, 
goes quickly into inflation of prices. We have marked 
up our stock of goods and fancy we are just so much 
richer. But we have put them so high that foreigners 
won’t buy them, except when they cannot get them 
elsewhere, whereby our exports are reduced. At the 
same time our high prices induce increased imports, 
and thus is the balance of trade thrown against us, as 
it has been for several years down to last spring, when 
the natural contraction of our currency (by hoarding 
and hiding) began to turn trade in our favor, mainly by 
reduction of our prices. 

There is another law of finance, which should be 
obeyed, as all these laws must be at last. If Congress 
should decree that every dollar of the bank currency 
should be issued west of Ohio, and south of Mason & 
Dixon’s line, and capital could be borrowed in the 
privileged section to accomplish the issue then of the 
354 millions of bank notes, those notes would flow to 
New York and other centers of capital just as they do 
now. In a few months the same plethora at the center 
and deficiency at the extremities would exist as now— 
but with this difference : that the notes would thus be 
continually returning for greenbacks, destroying the 
profit of banking, and the ability to make loans. The 
banking sections would be utterly deprived of working 
capital and loanable money, while the sections deprived 
of the privilege would have free capital in abundance. 

Many have abandoned the plan of government issues 
of bonds bearing 3.65 per cent interest, to be inter¬ 
changeable for greenbacks ; yet many others advocate 
it under the idea that it would afford an expansion, and 
others that it would impart “elasticity” to the currency. 
Probably none have proposed that this shall go beyond 
200 millions. Now if that amount of 3.65 per cent 
bonds, payable in greenbacks at the Treasury on de¬ 
mand, should be issued for greenbacks, what would re¬ 
sult 1 Why, the savings banks of New England and 
New York that hold 650 millions of deposits would 
take the first 100 millions and probably more at once ; 
and lor the other 100 millions there would be an ac¬ 


tive competition between Trust Companies National, 
and State banks, Trustees, and others. The whole 200 
millions would be taken off hand, and it would produce 
one of the most severe monetary spasms ever known in 
our large cities. The funds that would go into this in¬ 
vestment are now loaned to, or deposited in, national 
and other banks on call. The banks use it in call loans 
and short business paper. It is a very active portion 
of the loanable capital. The security of a government 
bond, bearing 3 65 per cent interest, and payable on 
demand, is the best possible use for funds that may be 
wanted at a day’s notice. So it is that $200,000,000 in 
greenbacks (the basis of bank loans) the greater part 
of which is now active in business loans, would go into 
the Treasury, and there be ready at call. This cause 
would contract at b<?th ends, for while it would reduce 
the currency by the $200,000,000 thrown into the Treas¬ 
ury, it would reduce loanable capital almost as much 
by that amount fixed in the new bonds. Still more, 
the retirement of so many greenbacks would force a 
further fearful contraction of bank loans. The most 
radical advocate of specie payments, has not proposed 
any measure which would so quickly bring about con¬ 
traction of currency, reduced loans, and appreciation 
of the currency to par of gold, gold reserves in banks, 
and all the train of bankruptcies, and other consequenc¬ 
es of too harsh and too rapid approach to specie pay¬ 
ments, as would follow upon the operation of this 
scheme. 

It seems to be admitted that Congress has not the 
power to issue legal tender notes except under the ne¬ 
cessity of war; so a further increase of treasury legal 
tenders, most happily, cannot be looked for. To make 
more bank currency is to lock up more capital and 
make money for loaning scarce and dear. The effect 
of any of the proposed issues of government bonds, hav¬ 
ing interest, would be to retire the currency and lock 
up loanable capital, at least for the first $200,000,000, 
and that would produce distress enough to stop that pol¬ 
icy. What then can be done to make money cheaper 7 
There is only one course, to make the currency bet¬ 
ter ; to make it worth gold. That done, there is nu limit 
to the supply of money—true money; for if wanted, 
it will come from all nations under the temptation of 
good interest on good securities. Congress cannot set 
bounds to the supply of currency then, as it has done 
under a strange delusion for the last few years, for the 
currency will be that of the world, and we can afford 
to pay better rates for its use than any other people 
can. Even if our people hoard the gold, as now they 
hoard the paper money, it will then be of no moment, 
excepc to those who foolishly lose the interest on it, 
for the inward stream would flow to make good all that 
so disappeared; whereas now there is no way of supply¬ 
ing the want made by hoarding paper, except by lock¬ 
ing up more capital in bank currency, adding one evil 
to relieve another and lesser one. 

The first duty of all of us is to get at the bottom truth 
in this matter; to trace correctly cause and effect; to 
see that what we ask will be what we want when we 
get it; and then to do the good work of causing others 
to understand all this. Our people like to do right. When 
a great principle of right is involved, and they see it, they 
never fail to sustain the right. In this subject of the 
currency, there is involved indeed the interest of every 
citizen; but now there is involved a great moral ques¬ 
tion, second only to that of liuinun liberty. Now the 
currency law is a shackle upon us, obstructing our 
freedom of action ; it is a barrier to our trade, oper¬ 
ating hurtfully and oppressively and turning the bal¬ 
ance of our foreign trade against us; it is a national 
dishonor, so long as the pledge of public faith given by 
Congress years ago, stands unredeemed, and with no 
step for its redemption. 


No More Rag Money. 

[From Senator Thurman’s Speech, March 24.] 

Does not every Senator know that there is a class of 
political economists, in this country, who insist that 
the precious*metals shall be demonetized, and that the 
only currency we shall have in this country shall be 
a paper currency founded upon Government credit 1 
Does not everybody know that 7 Well, sir, what shall 
be that paper currency ? There they differ. Some say 
it shall be a national-bank currency. Others say that 
national-bank notes should be retired, and there should 
be nothing but a green-back currency. But, then, as 
to the volume of the currency. Here is a large num¬ 
ber of men I know in favor of the theory that you shall 
increase this volume of currency to $1,200,000,000 or 
$1,500,000,000, or even $2,000 000,000, and by making 
it convertible into a bond bearing a low rate ot interest, 



































46 


THE FINANCIAL RECORD. 


say 2 1-2 or 3 per cent., shall bring down the rate of 
interest all over the country to that rate. They be¬ 
lieve in that theory. They think it sound. They 
firmly believe that you can by the machinery of a con¬ 
vertible bond at a low rate of interest, and an unlimited 
amount of paper money, give anybody in the country 
as much money as he wants at 2 1-2 per cent, interest. 
That is what they mean by making money cheap. 
Now, Mr. President, are we prepared to do that? Are 
we prepared to declare that under a government which 
our fathers meant, if they meant anything, should be a 
hard-money government, but which has drifted a long 
way from their intention—do we now, against all the 
lights of experience the world over, mean to banish 
gold and silver from circulation in the country for all 
time to come, and do the business of the country upon 
nothing but irredeemable paper, depending for its vol¬ 
ume upon the will and caprice of the moment, or upon 
the views of members of Congress seeking re election 
or aspiring to higher place ? I think not. 

I do not think that all the teachirigs of political econ¬ 
omy are waste paper.. I do not believe that we are 
yet ready for this entire revolution upon so great a 
subject. And yet I do say that every step that we 
propose in the way of inflation is a step towards that 
end, and the question will sooner or later have to be 
met. Are we to do the business of this country for all 
time upon a wholly irredeemable paper currency, or 
are we to have the standard that exists elsewhere 
throughout the civilized world? For it is of no use to 
say “We only propose to increase the curreney forty, 
or fifty, or sixty, or one hundred million dollars now.” 
Sir, you did that three years ago. You authorized its 
increase fifty-four millions then ; and if you increase it 
one hundred millions now, three years hence there will 
be another demand for a further increase. The very 
same arguments will be used; the very same pressure 
will be brought to bear. Whenever there is overtrading, 
whenever people become deeply indebted, or whenever 
people have schemes of speculation which can only be 
secured by an inflation of the currency that shall turn 
men mad in the whirl of speculation or in the desire of 
amassing fortunes; whenever such a state of things 
comes about, the same agencies will be at work, the 
same efforts will be made that are being made now, and 
that are pushing us forward to what I see is likely to 
be the result—an inflation of the currency that will 
only aggravate the evils under which we at present la¬ 
bor. At least this is my opinion. 

I repeat, that while I am opposed to any harsh meas¬ 
ure to resume specie payments, while I am opposed to 
the contraction of the currency, while I am most anx¬ 
ious that we shall proceed so cautiously that we shall 
do as little injury to the business interests of the coun¬ 
try, and especially to the interests of the debtor class 
of the country, and not make them pay more then they 
contracted to pay—while I am anxious for that, I am 
unwilling to embark this country in overtrading and 
speculation, which have already brought such difficul¬ 
ties upon us and increased the indebtedness of the coun¬ 
try so far that no mg.n can foretell what will be the 
end. 

But, Mr. President, there is another thingthat ought 
to be observed upon. Your inflation of the currency is 
not simply meant to enable individuals to increase their 
indebtedness, to enable railroad companies and the like 
to get out of difficulties that they have improvidently 
got into ; but at the bottom of it lies another thing that 
the people of the country ought to understand. It is 
that you shall inflate the currency and create such a 
furor of speculation and business extravagance that 
Congress will be ready to embark in any and all meas¬ 
ures of internal improvement that may be suggested 
by artful or interested men,until the debt of this nation, 
instead of being what it now is, shall be perhaps two 
or three fold that amount. All that lies also at the bot- 
* tom of this business. This is but a stepping stone. 
This proposition for a moderate inflation is but the 
first step toward that abyss which we are tending; at 
least such is my opinion. And, therefore, Mr. Presi¬ 
dent, although many, very many, of my friends, for 
whose views I am accustomed to entertain the most 
sincere respect, differ with me widely on this subject, I 
am compelled to go by the lights of my own judgment 
and to oppose inflation. 


Senator Morton’s Letter Boiled Down. 

[From the Indianapolis News.] 

Mr Dear Friend: —At the time^ Congress met I 
thought that as the people cried for a remedy for the 
financial disease then afflicting them, I would give them 
some nice sugar-coated bread pills and receive my re¬ 
ward just as if I had done them some substantial good. 
But you know some other financial doctors have been 
interfering with my patents and prescribing remedies 
advised by the scientific writers. Among these is one 
Dr. Schurz. who has the presumption to say that for¬ 
eign remedies are good for American patients, and that 
we can learn something from the experience of Eng¬ 
lish, French and German doctors. Now you are aware 
that I am, like Mr. Gradgrind, an “eminently practical 
man,” and heartily despise book learning, nevertheless 


if the people, as I fear, ever become so foolish as to 
have faith in these old fogies who believe in science and 
history, it might injure my practice to differ too much 
with them, while on the other hand I must not contra¬ 
dict what I have previously said on this subject. 
Therefore, my dear friend, you will please inform all of 
my ignorant acquaintances that there is not so much 
difference between our theories as would seem at first 
view, but that we agree in principle and differ only in 
detail. Yours Doubtfully, O. P. Morton. 

[St. Louis Globe.] 

You can’t catch Morton on the wrong side very long 
at a time. It was a mistake to suppose that he ever 
dreamed of inflation. Perish the thought. He has 
been a collapser all along. The letter is a rebuke to 
those overzealous inflationists who telegraphed to the 
Senator that, if needed, Indianapolis would hold an 
indignation meeting over the veto. It is equally a re¬ 
buke to those hasty and unreasoning censors who were 
led to infer, from casual remarks of the Senator, that 
he was himself an inflationist. He is in favor only of 
such inflation as may lead directly to specie resumption. 
We are bound to accept this view of Morton’s financial 
policy, and to give him credit not only for good faith in 
expressing it, but for sagacity in understanding so per¬ 
fectly what was expected from his well-known disposi¬ 
tion to further the popular will. 

[Indianapplis News.] 

It is now in order for Messrs. Buchanan, Wallace, 
Guffin and the other great Indiana financiers, to cen¬ 
sure, in the name of the people of Indiana, their re¬ 
creant Senator who didn’t push through the Indiana 
plan and who now thinks inflation wasn’t such a bless¬ 
ing after all. Let them call an indignation meeting. 

[Terre Haute Express.] 

Usually a public man weakens himself when he un 
takes to explain his position. Mr. Morton’s justifica¬ 
tion does not seem to be an exception to the rule. The 
masses of the people have applauded his course ; they 
have looked upon him as their chosen leader in the 
great war now begun against monopoly and the money 
rings. He was stronger with the people before writing 
his letter than any man of his time, and behold, he be¬ 
gins to explain and apologize! Is he ashamed of his re¬ 
cent action on the financial question ? If he is, let him 
stand aside, and the people will secure a braver and 
more constant leafier. Does he apologize to the money 
rings, and to the leading newspapers which have abused 
him; to Harper’s Weekly, which has shamefully cari¬ 
catured and libeled him ? If this is the case, he is not 
the man that he has been taken to be ; he is not the 
great leader for whom the people are looking. 

[Milwaukee Wisconsin.] 

Senator Morton can not himself give a sufficient 
reason for his sudden passage from one extreme of the 
financial question to the other- When taxed in debate, 
a few weeks ago, with his inconsistency, his only an¬ 
swer was that he had changed his views. But so great a 
change should have some fuller explanation than has 
yet been given for it, in order to convince people that 
it is really the result of an honest change of views. 
Five years ago Mr. Morton was the able advocate of a 
policy that every reader of history and everj^student 
of political economy knows to be an accordance with 
experience and a sound theory; to-day he is advocat¬ 
ing a policy the direct opposite of it. In view of this 
sudden change, are his later utterances entitled to 
much weight ? 


The Spirit of the Press. 

[Cincinnati Commercial.] 

It is continually represented, that while the bankers 
and capitalists are opposed to inflation, the farmers and 
artisans of the West are, as one man, in favor of expan¬ 
sion. We had almost come to suspect this to be true, 
so often and co positively has it been asserted; and, 
therefore, read with surprise that the Advisory Com¬ 
mittee of the Illinois Farmers’ Association, which met 
recently in Bloomington, and resolved to take a new 
departure in politics, independent of both political par¬ 
ties, unanimously refused to adopt a resolution censur¬ 
ing Fresident Grant for his veto of the Senate Finan¬ 
cial Bill. There was not a farmer among them who 
did not know that there is plenty of money in the coun¬ 
try to buy any marketable thing he has to sell, and who 
is not opposed to cheapening the paper dollar by dupli¬ 
cating it. The fact is, the cry of scarcity of money 
comes from those who either live extravagantly beyond 
their incomes, or have nothing merchantable to ex¬ 
change for money. 

[Chicago Evening Journal.] 

Inflation and an indefinite departure from specie re¬ 
sumption means a sudden refilling of the wind-bags to¬ 
day, only to see it collapse again to morrow. A slow 
but sure approach to specie resumption, on the other 
hand, means-safety now and undoubted stability in the 
future. That is just the difference between the two 
causes and effects, and we. wonder how anybody can 
fail to “see it.” 

[St. Albans, (Vt.) Messenger.] 

If the bank note circulation is increased, the legal-ten¬ 


ders should be diminished dollar for dollar. Authoriz¬ 
ing additional bank note circulation, with a withdraw¬ 
al of fifty or seventy per cent of legal-tenders upon 
such increase, means inflation if the policy is availed of 
at all; and any bill that recognizes the principle or 
right of a further issue of paper money, is sure to be 
vetoed by the President. 

[Chicago Inter-Ocean.] 

In the great, absorbing offort for financial relief the 
Western members, with but rare exceptions, have stood 
together, though their efforts have been temporarily 
thwarted by the President’s veto. In all these matters 
they most truly and faithfully represented the interests 
of the workingmen of the West, who have no voice in 
the lobby and no backing from the metropolitan pre'8. 
Certainly the faithful among such public servants, who 
now know the nature of the foes with whom they have 
to contend, should be sustained by those whom they 
have served so faithfully. It is only by this course 
that we can hope to secure our rights at the hands of 
the law-making power. The voter—each man for him¬ 
self—in the town, out in the farmhouses, and in the 
cabins on the frontier should consider well this import¬ 
ant subject, and see that bis voice and personal influ¬ 
ence contribute to such results as he believes will be 
for the best good of his district and State, and the 
whole country. 

[Concord (N. H.) Patriot.] 

Banks and banking, founded and carried on with 
paper money for its base, will surely make the rich 
richer and the poor poorer. This would not be so if 
gold and silver were in circulation and ail business 
transactions were based on coin. The farmers and the 
mechanics are deceiving themselves when they imagine 
that they are making money at three dollars a day in 
paper money, instead of two dollars per day in gold. 
They may get one dollar more per day for labor, but 
with an inflated paper currency, they pay double for 
what they purchase. We cannot too strongly urge 
upon the people the importance of a reform in our fi¬ 
nancial system and that nothing can be done.unless the 
voters themselves will lay hold of this great work, and 
vote understandingly, and place sound and patriotic 
men in power. Indebtedness is not the only evil grow¬ 
ing out of an irredeemable paper money system ; it 
debauches the masses, to* a great degree. The remedy 
is with the people and no where else. If the masses de¬ 
sire a reform they must not only vote right, but they 
must not allow their votes to be bought and sold in 
the political market; if they do, they have no right to 
complain if they find themselves sinking lower and low¬ 
er in poverty and degradation. 

LDennison (Texas) News.] 

We see some of the Texas papers are advocating ex¬ 
pansion in the hope that it will make money more plen¬ 
tiful, but hoV can we expect to have money in the 
State when our people are continually sending it 
abroad? Money is sent here during the fall and win¬ 
ter to purchase our cotton ; our cattle and hides bring 
the cash ; and did we but keep our currency at home, 
we would have an abundance for all business purposes ; 
but this is the very thing we do not do. As fast as the 
money comes to the State, it is sent out again. So 
long as we pursue such a policy we cannot expect mon¬ 
ey to be plentiful, and an increase of greenbacks is not 
going to give any permanent relief. Let our people 
learn to husband the resources of this great State. Our 
farmers must make their own corn, wheat, potatoes, 
butter and cheese ; our moneyed men must turn their 
attention to home investments in manufactories that 
will supply our people with articles now obtained in 
the North. 

[Worcester (Mass.) Gazette.] 

This extremely ill-digested and complicated measure 
seems likely to pass the House. What the course of 
the President will be is a matter of doubt. We wish 
Congress might drop finance for a few years. In that 
time there may grow up a more healthy and intelligent 
sentiment throughout the West, and reasonable legis¬ 
lation may become feasible. 

[Lansing Republican.] 

The policy of inflation has been urged on the coun¬ 
try because it is of such great benefit to the poorer 
classes,—the “toiling millions who grind in the prison- 
house,” as Mr. Conger says. Now that class contains 
many thousands of Germans and Scandinavians who do 
the coarse work of the country and receive small wages. 
They are natives of countries w here nothing but hard 
money is ever used; and if paper was beneficial, they 
would have found it out by this time in America. But it 
is a striking fact that every German and every Scan¬ 
dinavian newspaper is strongly in favor of a return to 
specie payments. Grant’s veto has no warmer support¬ 
ers than the press which represents the opinion of these 
adopted Americans. 

[Pottsville (Pa.) Miners Journal.] 

We would also, at the-same time, establish a national 
rate of interest for the use of our home currency, not ex¬ 
ceeding six per cent. The idea of a Government like ours 
Having a national currency, with different rates of inter¬ 
est prevailing in the different States for its use, is just 














THE FINANCIAL RECORD. 


47 


as prejudicial to the business interests of the country as 
was the issue of about twenty or thirty different kinds 
of currency by the different States, which could not be 
used at par in travelling through the country. The 
Government has a right to establish a national cur¬ 
rency, and it has also the right to fix the price for the 
use of that currency in all the States of the Union, and 
if it does not exercise that power, it falls short of its 
duty to the people of all sections of the country. 

[Chicago Times.] 

The new bill is a humbug. It is a delusion and a 
snare. It is a product of financial quacks. If the pres¬ 
ent Congress could be induced to adopt Mr. Grant’s 
suggestion, and repeal the legal-tender acts, the repeal 
to take effect o i the first of January next, it would be 
well for it to remain in session long enough for that 
purpose. As it is, the best thing it can do is to pass the 
necessary appropriation bills, and adjourn immediately 
thereafter, as the workingmen have, with rare good 
sense, requested. 

[Green Bay fWis.) Gazette.] 

It would be idle as well as wide of the fact to assert 
that the country is dissatisfied with the President’s 
veto. The general verdict here, as elsewhere, is in its 
favor. 

^Providence Press.] 

The chief consideration to be borne in mind in regard 
to the currency, seems to us to be the necessity of put¬ 
ting it beyond all political or partisan or doctrinaire 
control. If there were no other argument against pa¬ 
per money, the annual disturbance of trade created by 
a session of Congress, the innumerable crude theories 
and experiments agitated, would be enough to cause 
sensible people to demand .that the whole business 
should be taken out of the hands of the legislature, and 
remanded to natural laws of exchange. This can be 
done in a summary manner, by simply repealing the 
legal tender clause in the bills under which greenbacks 
are issued. As long as the government makes the 
money of the country, so long there will be a strife be¬ 
tween the debtor and creditor classes to tinker with the 
currency. What honesty and legitimate business call 
for, is not so much either contraction or inflation, as 
stability. All tinkering with the currency is an impair¬ 
ing of contracts, and speculative. As long as this is 
the case, people will strive to make money by, legisla 
five acts, rather than by industry. It is a wretched 
system. For this reason, Congress ought at the earli¬ 
est moment to get on to some intrinsic basis of ex¬ 
change, and let currency bills alone. The great merit 
of a contraction scheme is not that contraction is in it¬ 
self justifiable, but that it is an indespensable means to 
a return to a specie basis. This is the supreme need of 
legitimate industry. 

[Chicago Post and Mail.] 

If no other result follows the currency agitation in 
Congress, and throughout the country, it is something to 
have had the subject so thoroughly discussed. There 
is nothing more eagerly sought than money, and yet, 
in ordinary times, there is no study so generally shunned 
as political economy. It is to the credit ot ail parties 
that, as the contest has progressed, it lias been attend¬ 
ed by an evident increase of enlightenment among all 
whohave participated in or even observed it. The ad 
dition in this way to the knowledge of the nation has 
been immense anil well distributed. Whether the stock 
of actual wisdom upon the subject has equalled the dif¬ 
fusion of knowledge is more doubtful. Men’s wants 
real or fancied, more frequently influence their opinions 
than their intelligence or their knowledge. Their ira 
mediate wants, also, are more influential than their ul¬ 
timate wants. A debtor wants more money, and al¬ 
though convinced that to give it to him by inflation 
works some injustice to his creditor, still he wants his 
money. A creditor wants his debt in a currency the 
most valuable, and although you convince him that to 
squeeze a debtor too tight may prove disastrous in the 
end, still he hankers for the “pound of flesh.” The 
temper and conscience of the American people are, 
however, in the aggregate on the side of honor. We 
are meaner as persons than we are as citizens, and here 
in is the financial safety-valve. President Grant 
struck the right key in his message. We do not like 
to prove falsetto national pledges or to stand disgraced 
in the eyes of foreigners who have trusted us. Here is a 
conservative influence which will preserve the country 
in its proper orbit. 

[Philadelphia Press.] 

“ Hard money” (or, at least, an attempt to get back 
to it), is ju 3 t now being tested. It is another name for 
“ hard times ” Under it the amount of t ie circulating 
medium diminishes and money is hard to borrow; 
work ceases, and the poor are thrown out ot employ¬ 
ment; wages are reduced below the rate Of subsistence; 
pauperism increases, and crime and social disorder are 
multiplied fearfully. It needs no intricate reasoning 
or elaborate presentation of statistics to prove that the 
currency of a country enters deeply into all the prob¬ 
lems of its social, domestic, and commercial life. The 


present generation of young men remembers the era of 
prosperity from 1860 down to the fatal moment when 
Mr. McCulloch began to retire the greenbacks from 
circulation, and the gradual descent since into poverty, 
misery, and crime, culminating in the terrible disaster 
of last fall. When money has been plenty the people 
have been prosperous ; when its scarcity tended to¬ 
ward its absorption by the bankers, money-changers, 
and other purely selfish forms of capital, they have 
been reduced to penury. So much for “ hard money” 
audits invariable accompaniment, “hard times.” 

[Richmond (Va.)State Journal.] 

Bi t if we look more closely we shall find that the 
East, as well as the West aud South, abounds with pro¬ 
ducers who earn their bread by labor. They make 
common cause with their brethren all over the country 
in the interest of that great cause daily becoming better 
defined in its statements and more powerful in its array 
of followers. Every man who earns his living by hon¬ 
est labor on the farm, in the workshop, or the office, is 
vitally interested in the overthrow of the Money Bing 
wherever he is, its practical exactions reach him and 
seize upon his earnings with remorseless clutch. The 
burden rests with crushing weight upon the whole 
country. Upon this question, the chiefest of all others, 
there is to be no North, no South, no East, no West. 
From the workshops of New England,from the teeming 
millions of the prairied West, from the mountains and 
valleys of the sunny Southland, the clans are gathering. 
Their watchword is heard loud above the mutter of 
party strife. It sounds through all the land, “Down 
with the moneyed feudalism! Give back to the people the 
right to use their own money without paying tribute.” 


The Best Currency. 

[From the speech of Senator Jones of Nevada.] 

MONEY ENOUGH NOW. 

Sir, I maintain that there is money enough now in this 
country for every legitimate purpose. But that you 
will ever see that glorious time when nobody will want 
money, that you will ever reach that era when nobody 
will lie clamoring for more money, I do not believe. I 
hope that time will never come, for then production 
will cease and paralysis seize upon the country, and it 
will go down, down among the seni'-barbarous and un¬ 
commercial nations, in which direction I believe the 
votes of the majority on this floor are calculated to 
send it. 

Why, sir, as long as it is easier to loll at the sea-side 
than it is to delve in the dark depths of the mine; as 
long as it is more agreeable to lead a life of elegant ease 
than to toil in the factory, the field, and the foundry ; 
as long as money will buy immunity from labor and 
can be exchanged for the necessities and luxuries of 
life, so long will you hear the cry re-echoed throughout 
this land that more money is wanted. The very fact 
that money is wanted is what stimulates legitimate en¬ 
terprise, endeavor, and energy. 

Suppose you vote $10,000 apiece to day to every man 
in the country, what would be the result? The desire 
to borrow would cease when all were thus supplied, but 
about that time it would be discovered that the money 
was absolutely worthless, and the refrain of “more 
money” would" change to the more sensible one of “bet¬ 
ter money.” 

I sympathise heartily with the debtors of all sections 
of the country. I sympathize with all those who, tempt¬ 
ed by the superabundance of money, have embarked in 
experiments and speculations that have proved disas¬ 
trous, and who now find themselves burdened with 
debts for which they have nothing to show. I know it 
would he very agreeable as well as profitable for them 
to have the volume of this paper currency increased, 
and its purchasing power thereby diminished ; in other 
words, to make property go up and money go down, 
so that they could get the latter easilv and pay their 
debts without inconvenience ; and I would almost be 
persuaded to vote with their friends here, if I was sure 
that they would get out of debt; hut the very mo¬ 
ment you issue this additional currency and they see 
property rising in price from day to day, will not these 
reckless risk-takers mistake it again for prosperity ? 
Will they not think they are getting rich, and use the 
increase in the price of their property as an additional 
margin to run further in debt? I fear these will be the 
results. I am afraid the remedy proposed will not 
reach the disorder at all. I hope the Senate will de¬ 
cide to stand by the integrity of the country. No gov¬ 
ernment, no people, can be prosperous that ignores the 
proposition that, honesty is the best policy ; thatessavs, 
by any sort of legislation, to disturb the relationship 
between debtor and creditor; that tells the creditor 
that the hard day’s work he has already performed 
and loaned to the debtor shall be repaid by half a day’s 
work on the part of the latter; that attempts to “coin 
money in that false crucible called debt,” and legalizes 
robbery by enacting that the base result shall be a 
legal tender. 

THE GOLD PREMIUM. 

If money is scarce, I ask in the name of common 


sense, why will not people give more for it ? Why do 
not the values of property in this country bear some 
just relation to the values of property all over the 
world ? Why, sir, the premium on gold does not fully 
show the depreciation of this paper; and there is the 
difficulty. I differed from nearly every Senator on this 
floor in the reason which induced me to support the 
amendment introduced by the Senator from New Jer¬ 
sey, [Mr. Frelinghuysen.] The objection was made by 
friends of that amendment that it would have a ten¬ 
dency to make gold rise in price. Now, sir, I say gold 
ought to rise. Every other commodity in this country 
—butchers’meat, groceries, provisions—everything that 
enters into domestic use has risen, so that in relation 
to them, greenbacks are really at a depreciation of ful¬ 
ly 40 per cent, wln^e in relation to gold, which has been 
shorn of one of its chief uses by being demonetized, 
the same greenbacks are at a depreciation of only 10 or 
12 per cent. The effect of this is to discourage mining 
enterprises and depress mining interests. If the Gov¬ 
ernment ever intends to resume specie payments these 
interests should be stimulated and encouraged by every 
legitimate means. 

There is no demand for gold in this country beyond 
the small amount necessary to pay the duties on im¬ 
ports and the interest on the national debt. When I 
come here from Nevada with gold and silver—the only 
money in circulation there—and find that it is too low 
in price, I cannot help it. In order to get its full value 
I must engage in foreign trade, become a gambler in 
the gold-room, or leave this country and go to France, 
England, or "some other country where gold is the stand¬ 
ard, and circulates at its full value. If I stay here, I 
must trade it for paper at a premium of from 10 to 12 
per cent, which, as I said before, is much less than the 
difference between paper and every other commodity. 

I have no remedy. I must submit to the loss. It is to 
the interest of this country that the real depreciation of 
paper should be exactly measured by the premium on 
gold. That this is not the case there are examples all 
around us tg prove. That no good does or can ’•esult 
from this state of things can be'easily demonstrated. 
For example, suppose one thousand wagons can be 
made to-day in this country, at $100 apiece; as gold 
stands now, the foreigner who would like to purchase 
them and thus give us an export trade to balance off 
some of our imports could pay for them with $90,000. 
But he can get them for $85,000 in a country where 
gold circulates as money, and this country loses the 
business. Now suppose gold should go up to 125, where 
it really belongs, in that case be could pay for the same 
wagons with $80,000 in gold and still not disturb the 
relation between paper and anything else in the coun¬ 
try. This would make possible an export trade not pos¬ 
sible now, owing to the depreciation of gold. In other 
words, gold is the cheapest thing in this country, and 
the commodities sent here from every portion of the 
earth seek that in exchange in preference to anything 
else we produce. We can export nothing so readily as 
gold. It is the cheapest commodity we have, and is, 
therefore, in the greatest demand for exportation. 

THE ARGUMENT SUMMED UP. 

I regard this question as one of the most serious and 
important that ever pressed upon Congress and the 
country. Its solution involves the material and moral 
welfare of the nation. An inflation of the currency, 
instead of being a remedy for our present evils, would 
aggravate them all. It would unsettle values, put an 
embargo on legitimate trade, and, in the end, again par¬ 
alyze the industries which it might temporarily stim¬ 
ulate. It would force merchants, in self-defense, to be¬ 
come speculators and gamblers, while most of the cap¬ 
ital of the banks of the country would be employed in 
adjusting the winnings and losings of the stock board 
and gold-room. It would encourage national and indi¬ 
vidual extravagance, the results of which would proba¬ 
bly he to precipitate repudiation find bankruptcy. 

I have neither time nor inclination to make compar¬ 
ative estimates of the amount of money in circulation 
per capita in this and other commercial countries. 
There can he no doubt that there is a redundancy of 
it whenever the market price of gold is above its mint 
price. This philosophic truth was established beyond 
cavil by the report of the bullion committee of the 
British Parliament in 1809. The Government has no 
more t° <1° with the amount of money in circulation 
than it has with the amount of air in circulation. Let 
it hut perform one of its highest duties; let it repeal the 
barbarous law of 1862, by which paper money was de¬ 
clared a legal tender in the payment of debts; let it 
retire its promises, and restore the world’s money, the 
constitutional money, the only real money, and permit 
it to perform the functions for which it was intended, 
and the volume will he regulated by laws as unerring 
as those which keep the heavenly bodies in their places. 

While there may be variety of ways, there are but 
two general roads between which to choose; the one 
leading toward inflation, the other toward contraction. 
The former appears easy and inviting ; the latter steep 
and rugged. But in the end, so surely as effect fol¬ 
lows cause, contraction will lead to safety, honor, pros¬ 
perity, happiness, and life; while inflation will surely 
lead to dishonor, misery, and decay. 































































































, 















































































































































• 


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VOL. I. FRIDAY, MAY 29, 1874. 


NO. 17. 


The Financial Record will be continued until further no¬ 
tice and will be sent free of postage, to all persons who will re¬ 
mit 50 cents to the publishers. All editors who receive it are 
Invited to send their papers in exchange. It will be no longer 
published by the American Social Science Association, 
but for the. present, as heretofore, communications respecting it 
may be addressed to the Secretary of the Association, F. B. San¬ 
born, No. 5 Pemberton Square, (Room 21,) Boston; aud all ex¬ 
change papers, public documents, etc., may be forwarded to the 
same address. 


The Spirit of Congress. 

The proposed compromise bill on the currency ques¬ 
tion made its appearance in the House on Monday. 
An effort was made tD bring it at once before the House 
and pass it off-hand, under a suspension of the rules; 
but the necessary two-thirds could not be obtained and 
the bill has gone over until it can be reached in regu¬ 
lar order. 

The new bill is of the nature of an amendment to 
the old Maynard bill, as transformed by the Senate, so 
that, if it should be passed and vetoed, the veto message 
would this time be sent to the House. We summa¬ 
rized the points of the measure as passed by the Senate 
last week, and we now note the changes agreed upon 
by the House committee : 

(1) The provision requiring banks to retain one- 
fourth of the coin interest received is stricken out, 
(2) as is also the requirement that after ninety days 
from the passage of the act banks shall keep their re¬ 
serves wholly at home. (3) Instead of a contraction of 
legal tenders to the amount of 25 per cent, of new bank 
issues, it is proposed that 40 per cent, of the amount of 
additional bank circulation shall be withdrawn from 
the greenback issue, and (4) cancelled and carried to 
the credit of the sinking fund. (5) After July 1, 1878, 
legal tender notes are to be redeemable in any interest- 
bearing bonds now authorized, or in gold if the Sec¬ 
retary of the Treasury so decides. 

Most of these amendments are wisely inserted, but 
one of them tends to make the bill even less accepta¬ 
ble to the hard money men than it was at first. The 
setting of a day when legal tenders will be convertible, 
if not redeemable,is of itself sufficient to atone for much; 
the clause directing that canceled greenbacks shall be 
carried to the account of the sinking fund would prevent 
a claim by and by that the withdrawn notes are a “re¬ 
serve;” the provision that an amount of greenbacks 
equal to 40 per cent, of the new bank issues shall be 
withdrawn, is slightly better than the 25 per cent, re¬ 
quirement of the Senate bill, but still does not go far 
enough; and the requirement that one fourth of the 
coin interest should be retained was an absurdity, since 
gold is not now currency in this country, and was ju¬ 
diciously struck out. 

The second amendment, striking out the require¬ 
ment that banks shall keep their own reserves, is wholly 
bad. There may be a chance for a discussion whether 
there is wisdom in forcing banks to maintain a given 
proportion of reserve; but if the principle is to be 
acted upon at all, it should be made a safe principle. 
This bill takes away the excuse for keeping reserves 
with city banks, by providing a new system of redemp¬ 
tion. It abolishes reserves against circulation, and thus 
diminishes very greatly the amount required to be 
held. For example, a certain bank in Maine, with a 
capital of $250,000, reported last September liabilities 
which would compel it to hold $45,847 as reserve, of 
which $18,379 must be kept in its own vaults. Under 
the new law, as proposed by the House committee it 
need keep but $23,447 in all; of which $11,200 would 
be in Washington to redeem its notes, $7348 might be 
left with a “redeeming agency” which had nothing to 
redeem, and only $4898 need be kept at home to meet 
liabilities to the extent of $305,645. Such a “reserve’’ 
would be merely a pretence. 

As to the prospects of the bill, opinions differ widely. 
The vote in the House was not strong enough to indi¬ 


cate that the bill will be passed without amendment; it 
is not certain that the Senate would accept any of the 
clauses recommended to the House that look towards 
greater contraction or to resumption; and there is lit¬ 
tle reason to suppose that the President will look with 
favor upon the measure. It is expected that action 
will be taken on it at an early day. 


The Financial Question. 

At the Social Science Congress in New York last 
week, an evening was given up to the discussion of fi¬ 
nancial topics, and papers were read and addresses 
made by several gentlemen of much acquaintance with 
finance, including Prof. Sumner of Yale College, whose 
“History of American Currency ” has given the coun¬ 
try so much light on the past results of paper money. 
Mr. George Walker, a banker of New York, presided, 
and in his opening speech told some wholesome truths 
about our national weaknesses and our present condi¬ 
tion. He said, among other things: 

THE QUESTION STATED. 

For the first time in the present generation the domi¬ 
nating interest before the country is finance. It ab¬ 
sorbs the attention of Congress as it has not done since 
the days of Gen. -Jackson and the United States Bank. 

It is true that financial measures of a more momentous 
character than those now under discussion were enacted 
by Congress ten years ago; but that was during the war 
when, their importance was dwarfed by the grandeur of 
the struggle of which they seemed but insignificant in¬ 
cidents. Outside of Congress and the small body of 
bankers and capitalists, tiie finance measures of t.he 
war were not seriously considered or scrutinized. In¬ 
deed, they followed each other in such rapid succession 
that it was hardly possible to consider them separately 
in their antecedents or their consequences. On the 
other hand, many things now conspire to give unusual 
and merited prominence to the financial policy of the 
country. The panic of last fall, and its attendant train 
of disasters; the absence of any absorbing party issue; 
the weakness of party organizations; and, finally, the 
conviction which is at last brought home to a large por¬ 
tion of thinking people, that this is a personal and do¬ 
mestic question, the right settlement of which affects 
the smallest communities and households. 

THE VETO. 

Since the war ended a desperate struggle has been 
going on in this country, between the exuberant life 
and vast natural resources of the nation on one side, 
and a false political economy on the other. An attempt 
has been made to prove that America is an exceptional 
country, and is not subject to the laws of finance and 
public and social economy which govern the rest of the 
civilized world. But the struggle is ended, and the at¬ 
tempt has ignominiously failed. For a time it was 
hoped and feared that the President was a victim to the 
hallucinations which blinded some of his most loyal 
followers, but in his own simplicity and strength he has 
emerged from the mists which obscure the Capitol, and 
seemed to hang over the White Home, and has given 
the coup de grace to a series of measures pending 
in Congress, which menaced the credit of the nation 
abroad and its prosperity at home. The effect of the 
veto has been most remarkable, both in and out of Con¬ 
gress. It has settled the question as to what may not 
be done, and it has settled it on broad principles, and 
not merely in details. No measure, therefore, is likely 
to be presented for the President’s signature which 
looks towards inflation, or militates against a reason¬ 
able progress towards specie payments. All beside 
this—especially all that relates to banking—is fairly 
open and debatable. The community may safely set¬ 
tle down under the assurance that no further steps 
backward will be taken. But more gratifying than its 
influence in Congress has been the reception of the 
veto out of Congress, both in Europe and this country. 
A newspaper of this morning invites attention to the 
fact that United States five per cents are now two or 
three per cent above par in gold both in the home and 
foreign markets, and bases on this fact the timely sug¬ 
gestion that Congress shall authorize and the President 
shall undertake the funding of the remaining sixes into 
five per cent bonds. 

THE WEST AND INFLATION. 

The reception of the veto at the West shows how 
sadly misrepresented that vast and powerful section of 
our country has been in respect to inflation. The great 
constituency of repudiators who have frightened so 


many Western Congressmen out of all sincerity of opin¬ 
ion or action on the finances, is found not to exist. 
The Western farmer has proved a better political econ¬ 
omist thaD his representatives. He is beginning at last 
to understand, that a section of country which sells its 
great staples at prices fixed in hard-money countries 
cannot longer afford to encourage the maintennace of a 
currency which adds largely to the price of all it has to 
buy. Having, in fact, returned to a specie basis in its 
own commerce, it is above all other sections interested 
in forcing the whole country back to the same stand¬ 
ard. 

HOW TO RESUME. FRANCE AND THE UNITED STATES. 

How to return to specie payments is, of course, a 
most difficult problem ; but if all the country were 
agreed, it would not be difficult to take steps in that di¬ 
section. The example of France in her recent troubles 
is worthy of careful study and of imitation. No such 
burdens were ever so successfully borne; no such diffi¬ 
culties ever so quickly surmounted. Two things have 
chiefly contributed to this result—the industry and 
economy of the people and the soundness of the bank¬ 
ing and currency system. Before the war the Bank of 
France held in specie an amount nearly equal to its 
paper issues, and there was a vast circulation of the 
precious metals in the hands of the people. Though 
the gold disappeared with the war and the suspension of 
cash payments, comparatively little of it left the 
country, the Government paying as large a portion of 
the indemnity as possible in the form of bills on Eng¬ 
land and Germany. In painful contrast to the frugal 
habits of the French people has been the extravagance 
of our own. We all spend money recklessly. The an¬ 
nual budget of the nation has been far greater than it 
ought to be. Our cities have laid out too many parks 
and boulevards and built too many water works and 
costly buildings, excellent as many of these things are 
in themselves. Railroads have been built not in answer 
to the demands of population, but to suit the purposes 
of contractors, of importers of iron and sellers of bonds. 

DEBT AND THE,PANIC. 

The panic of last fall is full of instructive lessons, 
which, in the stagnation we now suffer, are being slow¬ 
ly digested. It was caused by overliving, by an exces¬ 
sive growth of public and private indebtedness, and by 
the overabsorption of quick capital into fixed invest¬ 
ments. This last is the one invariable phenomenon at¬ 
tending all periodical crises. It comes from natural 
causes, and cannot be altogether helped, but it can be 
greatly aggravated by bad finance and bad banking, 
as I am of opinion it was in our case. Debt, however, 
was the special curse which we brought upon ourselves 
—national debt, municipal and corporate debt, indi¬ 
vidual debt. The fatal facility with which the Govern¬ 
ment disposed of its obligations tempted all lesser bod¬ 
ies to try their hand at borrowing. Thus States, coun¬ 
ties, cities, towns, and manufacturing as well as rail¬ 
way companies set themselves at work to print and sell 
bonds; while individuals, considering themselves in 
the light of corporations and entitled to share the cor¬ 
porate privilege, emulated the higher example. The 
style of living advanced so much that it became neces¬ 
sary to have great profits to sustain great expenses. 
No doubt a large part of the personal dishonesty which 
the last two or three years have unveiled has been due 
to the exigences of luxurious living. It has made 
slaves of all, and ruined not a few. Neither as a nation 
nor as individuals are we content to move slowly. The 
records of a life time of steadv work and economy must 
be grasped in a few years. We drink the wine of life, 
not with temperate enjoyment, but to drunkenness. 
It is a good time to think of there things when enforced 
idleness leaves much time for thinking. The passion¬ 
ate life of the war cannot last always; it wastes too 
rapidly. Let us be content with less, and take more 
time to enjoy it. 


The Illinois Farmers on the Currency. 

Mr. Willard C. Flagg of Illinois, who was quoted by 
the Chicago Journal as favoring honest money (as he 
does) does not think himself supported by a majority 
of the brother farmers, on that subject. He says ; 

It is true that, believing our money needs improve¬ 
ment in quality rather than increase in quantity, I be¬ 
lieve President Grant did right in vetoing the “inflation 
bill.” But in this 1 believe T belong to a minority of our 
Western farmers. And, whilst I consider the curren¬ 
cy question an important and possibly dangerous one 
for the Farmers’ Association to meet, I think their 
chances of survival quite as good as those of the Re¬ 
publican and Democratic parties, which are also di¬ 
vided on this important matter. The position that the 




















50 


THE FINANCIAL RECORD. 


State Farmers’ Association has taken on this question 
is expressed in a resolution adopted at Decatur: 

llesotved, That we favor the repeal of the National Banking 
law, and believe that the Government should supply a legal 
tender currency directly from the Treasury, interchangeable for 
Government bonds bearing tile lowest possible rate of interest. 

In regard to this whole question the Chicago Tribune 
said some weeks ago: 

When the Advisory Committee of the State Farm¬ 
ers’ Association voted down the resolution condemning 
the President for vetoing the inflation bill and for not 
vetoing the salary-grab bill, it was no indication of the 
sentiment of the farmers nor of the Committee. The 
resolution was voted down merely because the Com¬ 
mittee felt it to be beyond their province to take any 
action which would commit the people they represent¬ 
ed. This Committee was charged simply with the task 
of fixing the time and place for holding the Con¬ 
vention in case it was decided that the farmers should 
go into politics as an independent party. The vote was, 
therefore, no indication of the feeling amoDg the farm¬ 
ers on the currency question. This is left for them to 
express at their Convention in Springfield, and the 
question will undoubtedly exert considerable influence 
in the selection of delegates. But if there were a 
strong feeling among the farmers in Grant’s favor on 
the veto question, it does not follow that the farmers 
will not enter just as heartily into their independent 
movement as if no such feeling existed. Does Gen. 
Grant represent the Republican party in this issue, or 
do Messrs. Morton and Logan ? Pending the decision, 
it is not likely that the farmers, favoring one side or the 
other will care to act with a party divided against itself, j 
the success of which would leave the country in a state j 
of uncertainty as to the final solution of the most im¬ 
portant question before it. Congress may or may not 
adopt the new finance bill, but in either case there is a 
new dissension and additional uncertainty in the Re¬ 
publican party. The blow has been struck, the split 
made, and it will widen in spite of every effort to close | 
it. If no financial measure is agreed upon by Congress, 
the party will furnish an evidence of division and in- j 
capacity. If the new bill is adopted, the repudiation 
Senators and Congressmen will come home defeated, 
but their stake is too large to be readily surrendered. 
In every possible view of the case, the currency ques¬ 
tion provides a new reason for independent political 
action. If the impressions of Mr. Flagg, the President 
of the State Farmers’ Association, be correct, the inde¬ 
pendent movement in this State is in the right direc¬ 
tion. It will enlist the co-operation of the “hard-mon¬ 
ey” Democrats, and attract all those in the Republican 
party who prefer a stable currency to the danger of an 
unstable currency under the control of a party that is 
divided on the question. Sound views on the currency 
question will increase the strength of the independent 
movement incalculably. 


Hard Times. 

A Maine newspaper, the Biddeford Times, thus dis¬ 
courses on the present aspect of business affairs : 

The bad condition of the financial affairs of the 
country, the misappropriation of the people’s money, 
and the numerous and fraudulent plans to rob them, 
tending to demoralization, have something to do with 
“hard times,” but not all. Almost every American 
imagines that he has a natural talent for making money 
if he only has the chance, and therefore he is ready to 
embark in any undertaking, no matter how unreasona¬ 
ble it may be. For a time he may struggle against the 
laws of late and reason, but sooner or later, ninety-nine 
out of every hundred are overwhelmed with fadures, 
and are cast upon the world as bankrupts. But until 
the final ruin comes—until every jot and tittle of his 
property is swept away from him—he “flourishes like 
a green bay tree.” His wife and daughters are Flora 
McFJimseys in elegance; fast horses, fast sons, wines 
and dinners, go to dazzle the world as to his true posi¬ 
tion, and induce the unwary to extend his credit, w hile 
it is the only prop left to his financial fabric. To reme¬ 
dy the evil, and that is only temporary, he goes in for 
inflation. It needs no particular powers of morality to 
declare that such a condition ofthings is entirely wrong, 
but how is it to be remedied? We answer, by teach¬ 
ing the people that ‘-‘honesty is the best policy”—the 
only wise policy. Our farmers, our merchants, our 
manufacturers, should learn to live within their incomes, 
and to consider the payment of debts a moral duty. 
Our churches should teach the doctrine that repudia¬ 
tion of debts, when they can be paid, is but another 
name for robbery. If these things can be accom¬ 
plished, we will have a remedy for “hard times.” 

In regard to the pecuniary condition of some parts of 
the country, the Lansing (Mich.) Republican gives us ! 
this information: 

Many Eastern banks a r e surrendering their circula¬ 
tion entirely and taking back their bonds from the 
Government. If it is such a profitable monopoly, why 
don’t they hold on to it? Any portion of the country, 
East or West, which has surplus products that the 


market needs, can exchange them at once for money. 
Minnesota was never so lull of money as this spring, 
because she had a magnificent wheat crop to sell. 
Michigan had a poor wheat crop last year, and only 
a moderate fruit and wool crop, and her lumber is slow 
of sale : therefore money has been scarce in Michigan. 
If she had ten times as many banks as now, money 
would not be plenty without something to exchange 
for it. The Pennsylvania iron region is well supplied 
with banks, but money is scarce there among the peo¬ 
ple because the iron trade is dull. 

In regard to the discontent among farmers at the 
West, the N. Y. Times says : 

It would be a matter extremely to be regretted if the 
contest between the Grangers and the railroads went on 
to a bitter extremity. The West depepds, above all, 
on borrowed capital, and the fears already occasioned 
by this trouble, have turned away millions of dollars 
from investment in its improvements. There is begin¬ 
ning to arise a fear of Western railroad investments in 
ali the great markets of the world. Millions of capital 
are lying comparatively idle in New York and London 
which would pour into the West if this struggle were 
peacefully at an end. Kansas and the frontier West 
-complained bitterly of want of money, but it is pre¬ 
cisely this Granger’s movement which is keeping out 
expenditures of Eastern and foreign capital from those 
States. Many a fertile district is lying now unimproved 
because no railroad can be built to connect it with civil¬ 
ization. Many a farm is comparatively valueless be¬ 
cause foreign capital has been frightened away from 
constructing new communications. If the contest be 
pressed further, the older roads may be even obliged 
to cut off trains, and lessen means of transport for 
large districts, and yet the farmer, without doubt, feels 
himself as much aggrieved as the railroad. Both are 
losing in the game, and the only peaceful settlement for 
both is a return to specie payment and to revenue taxation. 
A Granger party, which would fling abroad a banner 
with these two objects inscribed, would meet with un¬ 
bounded sympathy in the East as well as the West, 
and would be striking at the root of the whole difficul¬ 
ty. 

The New York Sun, says : 

We are abounding in currency and ip the most ab¬ 
ject poverty of confidence. It is not lethargy, it is 
not paralysis, it is the comatoie of an apoplexy which 
will not respond in blood to the puncture of the lancet. 
Capital, always cowardly, is now in the abasement of 
the poltroon. It has no present faith, and but little of 
hope for the future. 

The feeling of insecurity in Wall Street, is not the 
only symptom of the prevailing disorder in the com 
mercial metropolis. Real estate has not for sixteen 
years, or since 1857, been as hard of sale there as it is 
in these times, and it is the estimate of the Evening Post 
that the salable price of real estate in the city is t wenty 
per cent less than it was at this period of last year. 

The Cincinnati Commercial thus comments on the 
state of things: 

The volume of spring business turned out to be 
lighter than even croakers anticipated, and hardly any 
of the manufacturing interests have enjoyed the revi¬ 
val which was looked for. Things are always dull in 
New York during the summer season, but next summer 
will be the dullest that has been known there for a long 
time. It is not only for lack of sensible financial leg¬ 
islation that New York is suffering. The people there 
have given themselves up to a long riot of senseless 
extravagance. The Wall Street thimble-riggers have 
carried on their swindling operations to the extent of 
hundreds of millions a year. The managers of inumer- 
able corporations with headquarters there have acted 
with systematic dishonesty toward the people who 
trusted them. New Yorkers have been told often 
enough that these things must bring some commensur¬ 
ate penalty. They could not possibly go on forever 
unless the moral order was changed, and the laws of 
cause and effect suspended. The New York papers 
often say that the city is still suffering from the panic; 
but this is a mistake, It is yet suffering from the state 
of things that preceded and preciptiated the panic. 

Spirit of the Press. 

[Shelby ville (Ky.) Courant.] 

The inflation of currency does not add, intrinsically, 
one dollar to the nation’s wealth, but on the other hand 
begets in the people not only a feeling of false security, 
but panders to that spirit of reckless speculation that 
has, already, well nigh ruined the country. It is high 
time that debtors of every class and degree were made 
to feel that honest obligation had to be met. Besides 
■ a year or two of self-denial would not only not work 
injuriously to citizens of every kind, but discipline the 
rising generation, and prepare the way hereafter for 
sounder laws of trade. The number of debtors to be 
injured will never be as small as at the passing mo¬ 
ment. Important above all else is the adjustment of 


a basis of bargain and sale over the entire land that 
shall restore confidence and establish something perma¬ 
nent ; and as the only kind of money that will form 
such a basis, is a currency composed of gold, silver, 
and paper, convertible on presentation into coin; and 
as nothing but gradual contraction can ever give us 
such a currency, and as inflation means future explo¬ 
sion and repudiation—for these reasons it seems clearer 
and clearer to our mind, that the wisest act of Presi¬ 
dent Grant’s entire administration thus far, was the 
veto of the Inflation Bill, for which many have been 
most bitterly blaming him. 

[Terre Haute (Ind.) Mail.] 

It is seldom that a public man puts himself before 
the community in such a pitiable, contemptible attitude 
as that assumed by Senator Morton. He has been sup¬ 
posed to be the leading spirit of the present adminis¬ 
tration, as he was the champion of a financial measure 
which was urged on and passed, as well as opposed, as 
an inflation measure. On that ground the President 
vetoed it. And the Senator, says in substance : “ The 
President and I are in exact agreement in reference to 
the principles at issue. The only difference is, that he 
thinks this an inflation measure, while to me it seems 
to be the opposite.” His letter appears to be a mere 
dodge by which to justify himself in not breaking with 
an administration which has snubbed him in a manner 
which no man, with more self respect than selfishness, 
would endure. Murder will out, and so will the dema¬ 
gogue’s character. We speak as a disinterested spec¬ 
tator. We have taken no active part in the contro¬ 
versy on finance, and it is not the views of Morton on 
this question that stir our indignation. We speak sim¬ 
ply of his double dealing. He either acted a part and 
deliberately deceived the people in his course while this 
bill was pending, or he is doing so now. The worst 
thing his enemies ever said against him cannot injure 
him so much in the eyes of all people who love truth 
and honesty, and desire these qualities in their public 
officers, as this letter written by his own hand. 

[Philadelphia Record.] 

There is a rapidly growing opinion, both at the 
South and in the West, that the inflation theory is an 
unsound one, and were it not for the schemes of poli¬ 
ticians, who want to use this question as leverage in 
the next Presidential election—a most dangerous ex¬ 
periment—there would be but little trouble on the sub¬ 
ject. The farmers are fast arriving at the conclusion 
that for them inflation can have but one result. The 
whole income of the West and South arises from the 
sale of the surplus of their productions. The postulate 
is simple and self-evident tfiat if they would get the 
most for their money in exchange for their products, 
they must hasten the day when they will be able to 
buy, as they now have to sell, at prices regulated by a 
currency of intrinsic value—a currency in which they 
will not have to give $10 for an article not .worth $9 in 
the currency of the world. 

[Spartanburg (S. C.) New Era.] 

The vote of the inflation bill of Congress was regard¬ 
ed as a trial of strength between the South and West 
against the East. We cannot regard it as a demonstra¬ 
tion of hostility between those several sections because 
of the war, nor especially, because of antagonism in 
interests. It is true that the West and South are more 
identical than the East. They are the great producing 
sections of the United States, and feel personally and 
politically alike, the absolute necessity of regulating 
transportation and the introduction of their products 
into the great entrepots of this American world. This 
feeling is the result of a sober calculation of personal 
interest. It has nothing to do with the character of 
government or its operations, only so far as govern¬ 
mental influence may be exercised through legitimate 
agencies. 

[Chicago Journal.] 

As another indication that the West is well supplied 
with currency, and is not clamoring for more, it is stat 
ed that brokers in Illinois, who have been in the habit 
ot making loans for Eastern parties, have returned 
quite large sums recently, being unable to place it at 
advantageous rates. As the ordinary rate of interest 
there is ten per cent, Eastern parties are generally con¬ 
tent with that, and as Western borrowers do not expect 
to be accommodated at less than legal rates, this return 
of funds to the East shows clearly that the West is not 
suffering for more currency, but on the contrary has 
more than usual now. 

[Terre Haute (Iud.) Gazette ] 

And yet there are persons who claim that the West 
is clamorous/or more money. It would probably not 
be exaggerating to say that whereas the proportion be¬ 
tween the number of papers opposed to and in favor of 
inflation is about as five to tour, that the aggregate 
number of readers of anti-inflation papers is as ten to 
one to the aggregate number of readers of inflation pa¬ 
pers. The best thing for Congress to do, under the 
circumstances, is to adjourn, and let its members come 
home, and learn how shamefully they have been mis¬ 
representing the people, their constituents, in this mat¬ 
ter. 



















THE FINANCIAL RECORD. 


51 


[Rock Island (Ill) Argus.] 

It is notorious among economists that the legal-ten¬ 
der act doubled the war debt. Add to this the tact 
that the lying promiseto-pay-curreney doubles the 
yearly burden of that debt upon the backs of the 
working classes, and the crime of the inflationists 
stands forth in its true proportions. 

[Jacksonville (Ill.) Journal.] 

No, we are not “in favor of destroying the green¬ 
backs’’as a circulating medium. But we are in favor 
of a gradual withdrawal of greenbacks until the remain¬ 
der are worth their face in gold, just as the Bank of 
England note is exactly as good as the gold sovereign. 
A declared and sincere purpose of reaching that end at 
a definite time would send goid down and greenbacks 
up forthwith. 

[Cedar Rapids (Iowa) Republican.] 

The Currency bid went to the White House, and 
there, in the palace whose chief occupant has been the 
pride and pet of the Inter-Ocean, it was slaughtered, and 
by his hand, and the Inter-Ocean, instead of fulfilling 
the promises it.had made to the party, instead of prov¬ 
ing its loyalty by yielding to the will of the people’s 
Conservator, falls to circulating rumors and calumnies 
as mean and sinister as any we have seen in the col¬ 
umns of the so-called independent press. It has not 
tried to heal the wounds made by the veto; it has not 
counseled moderation and discretion among the infla¬ 
tionists; but, on the contrary, it has impugned the mo¬ 
tives of the President; insinuated that his Democratic 
proclivities may have got the better of his judgment, 
and, in ways not quite amounting to positive declara¬ 
tions of disloyalty, encouraged the fanatics in their 
tirade on the Executive, and winked at their threats to 
divide and smash the party unless their demands for 
more currency were acceded to. 

[Chicago Tribune.] 

Here is a timely reprimand. Whatright has a paper 
(the Inter-Ocean) which obtained a small list ot sub¬ 
scribers who wauted a paper that would be indepen¬ 
dent in nothing, and never have a word to say in oppo¬ 
sition to the President, to publish column after column 
of stuff to show that the President has done wrong, 
that he did not understand the subject, and had been 
“influenced’’ by the Eastern bondholders. Shall trea¬ 
son like this be tolerated ? Has the Republican party 
an organ in the West? 

[San Francisco Bulletin.] 

Strange as it may seem, the only nation which ever 
went into the paper-money business that penetrated to 
its real and logical conclusion was Japan. When it 
first began to ob erve the civilization of Christendom, 
it discovered that inconvertible paper was.the circulat¬ 
ing medium in many countries, and especially in its 
nearest neighbor, the United States. Taking an ab 
normal state of finance, brought about by a long and 
harassing civil war for the genuine article, it went at 
once into the paper business, but it found that the peo¬ 
ple were very unwilling to accept its /cinsats at par. It 
was, therefore, ordained that wnoever should refuse to 
receive the Government legal tender should have his 
head taken off. We are satisfied that that is the only 
method by which an inconvertible paper can be kept at 
par, though human ingenuity is so great that it sqeh 
were the law at this moment, ways of evading it would 
before long be discovered- At least the Japanese Gov¬ 
ernment found it very difficult to enforce its legal ten¬ 
der at the edgeot the headsman’s axe, so it gave it up, 
aud adopted the world’s circulating medium. 

A Warning' from Austria. 

[From the Sau Francisco Bulletin.] 

Austria has already gone through the whole gamut 
of B. F. Butler’s financial theories, aud as a conse¬ 
quence, is now forced to take up the gambling business 
to save herself from hopeless bankruptcy. It is true 
that our case is a little different. The flow of immi¬ 
gration which is yearly adding not only to our laboring 
capacities but to the gold and silver stores of the coun¬ 
try, has modified, to some extent, the usual laws of fi¬ 
nance for us. It is this modification which has proba¬ 
bly led Morton and his associates to solemnly proclaim 
in Congress that we were a people so peculiar that the 
political economy which would do for most of the other 
parts of the worid, and especially the effete civilizations 
of Europe, would never answer for us. There is no dis¬ 
agreement between American and European astrono¬ 
my ; or in the chemistry of the respectictive places, 
or in any other known branch of human inquiry; 
except in finance. In the desperate and not altogether 
reputable effort which the Austro-Hungarian Empire 
is now making to raise the wind, we can read our own 
fate if the inflationists carry the day. It covers a con¬ 
siderable portion of Europe; has a large population, 
and ought to be, from its position and resources a lead¬ 
ing power, financially as well as politically. Notwith¬ 
standing all its advantages, the Austrian Government 
is now driven to the expedient of a lottery to replenish 
its exhausted coffers. 

All the financial misfortunes of this Empire are trace¬ 
able directly to paper money. For nearly 200 years it 


has been striving to make paper as good as gold and 
silver, but without the least success. It has gone on 
stumbling from one panic into another, and always 
sinking lower and lower. The effect on the people, of 
this instability of the currency, has been very marked. 
Even the German portion of the Empire, which inher¬ 
ited thritty and industrious habits, has become idle, 
speculative, and cynical. There is no encouragement 
for industry, for the accumulations of a life time are li¬ 
able, at any moment, to be swept away in a financial 
convulson. Efforts, brave but mistaken, have, from 
time to time, been made by it to relieve itself of that 
load of .paper which is crushing out every manly in¬ 
stinct and repressing every energy. On one occasion, 
especially, it was thought that the time had come to 
strike out heroically for financial freedom. It was 
found that the total circulation was over one thousand 
millions of thalers, and that the discount upon these 
was five for one—five thalers in paper for one thaler in 
gold. The problem of making paper as good as gold 
seemed to be a very simple one—merely to contract it 
until par was reached. So an order went forth that the 
paper in circulation should be returned to the Treasury, 
where one thaler in paper would be given for five, un¬ 
der the solemn obligation that no more should ever be 
issued by the Government. The order was obeyed, 
though with much wincing, and paper for a short time 
was on a par with gold. But the Government could 
not sustain itself on its own principle. It had to vio¬ 
late its solemn pledge, and to issue more paper under 
the name of anticipation notes, to the extent of four 
hundred million thalers. 

The one nation which extricated itself from incon¬ 
vertible paper in a philosophical manner was England. 
It is true that we worked out of a similar mess once, 
but probably the least said about the method the better. 
England, on the contrary, applied herself to the task 
before her with energy and determination. Nothing 
was done in haste or without due consideration. Every¬ 
thing was at first against the men who accomplished 
this great labor. The Bank of England was against 
them, and even commercial men did not fully under¬ 
stand the question. The report of the Bullion Com¬ 
mittee of Parliament, which is now generally regarded 
as the foundation of alll financial science, was desig¬ 
nated “ the report which was against its own facts.” 
But they carried the day by a dogged perseverance 
which nothing could turn or shake. That great con¬ 
test established that where there are two currencies the 
less valuable always drives out the more valuable, as in 
the case of inconvertible paper and gold and silver; 
that the balance of trade, used so frequently to account 
for a low financial condition, was a myth, and that in 
such cases the real trouble was inconvertible paper; 
that inconvertible paper by its very nature produced 
inflation after inflation, until the last and final collapse 
was reached. Indeed, there has been very little belief 
in the “ balance of trade” as a cause, instea d of being 
merely an effect, since Qnesnay assailed it. Nothing Is 
more true than that nations will have all the gold any 
silver which they need. They can always get all they 
want by lowering the price of the articles which they 
have to sell. 


Since the Veto. 

Gov. Hendricks of Indiana called on the President 
(whose successor he hopes to bej about the time that 
his Republican rival, Senator Morton, was writing his 
famous apologetic letter about the veto. Gen. Grant 
seemed anxious to know what the feeling of the West 
was in relation to the veto, and Gov. Hendricks, in an¬ 
swer, remarked that during the pendency and after the 
passage of the bill there was a good deal of feeling and 
exultation about it, but after the veto the interest 
seemed to subside almost entirely. He attributed this 
to the fact that those who had advocated the measure 
the strongest seemed to wilt after the veto and made 
no further fight, so that the measure dropped out of the 
public mind to a great extent. Perhaps he was think¬ 
ing of Senator Morton as one of the earliest to “wilt.” 


A St. Louis Financial View. 

BY W. T. HARRIS. 

If we assume as self-evident that the money of a 
country which is to measure the products of labor must 
itself be a product of labor, or else convertible directly 
into such products according to definitely named quan¬ 
tities and qualities specified on the face of the convert¬ 
ible money, we must conclude that a strictly irredeem¬ 
able currency would destroy civil society if continued 
for a long period. All such systems have collapsed, 
with great disaster to productive industry. But a na¬ 
tional paper currency is not of this kind. It is receiv¬ 
able for government dues—taxes, imposts, postal ser¬ 


vice, &c. From one-half to three-fourths of the “green¬ 
backs,” for example, are thus taken up annually by the 
government. If receivable for all duties, they would 
be still further redeemable to that extent. Such re¬ 
demption is also, aud has been practised by other na¬ 
tions. It is not a perfect form of redemption because 
it is not directly convertible into a perfect commodity. 
The precious metals form such a commodity ; national 
bonds bearing a fixed rate of interest payable in coin 
are also a perfect commodity. A national paper cur¬ 
rency should therefore be redeemable at the treasury 
for gold and silver, or interconvertible directly with 
bonds bearing gold interest. 

A paper currency which represents specie on deposit 
of equal amount, dollar for dollar, is sound. But such 
is not the system of banking in vogue anywhere in the 
world, nor is it proposed by those who oppose the pres¬ 
ent system in the United States. The 1G00 banks in 
the United States in 1860 had in circulation 200 millions 
of paper and only 38 millions of specie on deposit to 
redeem with. In case of a sudden and wide-spread 
panic, they could have paid 38 cents on the dollar in 
Louisiana, 15 cents in New York, 2 cents in Illinois, and 
19 cents on an average throughout the whole country. 
Not any better than this is the condition of the cele¬ 
brated Bank of England. Its resource in case of a 
wide-spread panic is to suspend and make its bills a 
“ legal tender.” Such banking as this, notwithstand¬ 
ing its great value to a community as compared with a 
system that uses only the precious metals, is a very im¬ 
perfect institution, and is liable at any time to collapse 
in case of a panic. Suspension means a forced “legal 
tender ” Act, with the disadvantage that credits are 
every where shaken. The loss to the productive indus¬ 
try of the country in a suspension of work by the labor¬ 
ers amounts to at least 50 millions of dollars per week. 
In case of a general panic, the country is injured to the 
extent of several weeks of idleness of the whole labor¬ 
ing class, which is quite likely to equal the entire amount 
of all the specie in the country. And this loss is a 
dead loss, for it cannot be made up ; it is not a change 
of ownership of property. Its demoralizing effects are 
still more formidable. Despair paralyzes the business 
energy of the community. 

A paper currency based on the national credit, and 
convertible into bonds only, is the only kind that can 
withstand the “ run ” of a panic. A bond bearing gold 
interest is a commodity and will sell anywhere where 
profitable investments are sought. Its rate of interest 
and the resources of the government will determine its 
value in the precious metals. A currency convertible 
into bonds is redeemable, because it may be changed 
at will into a commodity. Money as money is not a 
commodity, but simply the general possibility of all 
commodities. When a commodity is used as money, 
its use as a commodity is prevented, and hence a waste 
made. But any commodity used as money acquires 
thereby an inflated value conditioned upon its useful¬ 
ness as money. Gold is said to be inflated to ten times 
its nominal value in the arts by its use as money. How¬ 
ever this may be, a commodity must be at the basis of a 
currency, and there are two kinds of commodies to 
choose from—corporeal, like gold and silver, and incor¬ 
poreal, like a government bond. By far the most val¬ 
uable to the community is the species of property rest¬ 
ing on franchise. Of a kindred nature to stocks based 
on franchises are interest-bearing bonds. Government 
bonds are based on the right of the State to tax all the 
property within its dominion—even to the point of con¬ 
fiscation. They form the most stable species of incorpo¬ 
rated property, and hence the best form of commodity, 
into which to convert a paper currency. If, as Treas¬ 
urer Spinner has proposed, the bonds bore 3.65 per 
cent, gold interest, and were not to be taken up by the 
government except when offered at the treasury for 
currency at par, said currency again being fundable in 
similar bonds at the will of the person holding it, it is 
clear that the wants of the community would regulate 
the supply of money in the community. When redun¬ 
dant, an investment in bonds would instantly reduce 
the amount of currency, and when scarce the bonds 
would be presented at the treasury and currency 
drawn. Without a commodity at the basis of a paper 
currency, there could be no possible method of settling 
the interpretation of its unit of value. “Dollar” would 
not mean any specific amount of any commodity, and 
might mean what “dime” or “cent” does in coin. 
The “elasticity of the currency” demands that the 
needs of business shall determine the amount of it. 


Humors of Finance. 

The invention of the repudiation policy for which 
there are so many rival claimants, is due, not to the ad¬ 
vocates with whose names it is associated, but to a joke 
prepared, as one of the richest he ever uttered, by the 
late Artemus Ward. His comic plan for paying the 
public debt was “pay it in greenbacks, and let the 
greenbacks wear out.” How many now base their 
claims to statesmanship upon the appropriation without 
quotation marks, of this stale old joke of that pre-em¬ 
inent political economist and financier, Artemus Ward 1 






































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FINANCIAL RECORD. 

"WE NEED ONE THING BESIDES MORE MONEY, AND THAT IS BETTER MONEY.”— Senator Each. Chandler. 


VOL. I. 


The Financial Record will be continued until further no¬ 
tice and will be sent free of postage, to all persons who will re¬ 
mit 50 cents to the publishers. All editors who receive it are 
invited to send their papers in exchange. It will be no longer 
published by the American Social Science Association, 
but for the present, as heretofore, communications respecting it 
may be addressed to the Secretary of the Association, F. B. San¬ 
born, No. 5 Pemberton Square, (Room 21,) Boston; and all ex¬ 
change papers, public documents, etc., may be forwarded to the 
same address. 


The Spirit of Congress. 

The record of the week comprises only the defeat by 
the House of what has been known as the Blaine com¬ 
promise, which was fully described in our last issue, and 
a hitherto ineffectual attempt on the part of a Commit¬ 
tee of Conference to agree on a new measure. On 
Thursday, the 28th May, Mr. Maynard reported the* 
substitute bill from the Committee on Banking and 
Currency, and without any debate the previous ques¬ 
tion was ordered. The Blaine substitute was then re¬ 
jected, 111 to 118; the House next refused to agree to 
the Senate bill 70 to 164; and then, on motion of Mr. 
Maynard, it was voted that the House request a Con¬ 
ference Committee. Messrs. Maynard, Farwell and 
Clymer were appointed. In the Senate, Messrs. Mor¬ 
ton, Sherman and Merrimon were appointed conferees. 

An analysis of the vote rejecting the Compromise 
bill shows that the minority (111) was made up of Re¬ 
publicans, almost exclusively ; the moderate inflation¬ 
ists and the most of the hard money Republicans unit¬ 
ing in its support, but only six Democrats and Liber¬ 
als joined them. The majority (118) comprised nearly 
the entire Democratic strength, reinforced by the wild 
inflationists of the Butler, Kelly and Fort stripe, with a 
few of the more unyielding honest-money Republicans,, 
like Governor Hawley of Connecticut. The vote in 
the Senate on agreeing to the conference was a test, 
but it showed no change whatever from the former 
votes on the same bill. 

The Conference Committee is understood to have 
had several meetings but to have agreed upon nothing. 
It looks as though a fear for the safety of the Repub¬ 
lican party had much to do with the efforts to patch up 
a bill that can pass and be signed ; and when that con¬ 
sideration comes uppermost, the hard money men have 
good ground for apprehension. Still, up to the present 
time, nothing indicates that the more crazy of the infla¬ 
tionists will let their party allegiance control them 
in this matter; and they, with the Democrats who 
are not particularly interested in the salvation of the 
ruling party are a majority. 


Changes iu the Treasury. 

Since our last issue there have been important 
changes in the Treasury Department. Solicitor Ban- 
fleld resigned on Saturday. Monday the President 
nominated Secretary Richardson as a judge of the 
Court of Claims, and Gen. Benjamin H. Bristow of 
Kentucky, as Secretary of the Treasury. Both were 
confirmed on Tuesday. It is understood that Secre¬ 
tary Bristow only consented to enter the Treasury on 
condition that Mr. Sa wyer should retire ; and his res¬ 
ignation is therefore expected speedily, or if not given, 
he may be removed by the appointment of a successor. 

Only personal friends of Judge Richardson can feel 
regret at his retirement. It is the almost universal ver¬ 
dict that he has failed badly. The error of judgment 
or the neglect of duty which suffered the Sanborn con¬ 
tracts to be made and carried out, with so much detri¬ 
ment to the country and scandal upon the administra¬ 
tion, made his resignation inevitable. But this was by 
no means his only fault. He was weak in administra¬ 
tion, undecided in policy and totally lacking in the 
knowledge requisite to originate and carry out any com¬ 
prehensive measures of finance. He gained the confi¬ 
dence neither of the inflationists nor of the hard money 


FRIDAY, JUNE 5, 1874. 


men. He inflicted great injury upon the country by 
reissuing a part of the canceled debt of the nation un¬ 
der the false plea of a, “reserve.” He brought ridicule 
upon himself by the wonderful scheme for resuming 
silver payments. Having made a bad bargain, he tried 
to shelter himself from blame by asserting that he 
made it only as matter of routine, and that his powers 
were limited. He has done nothing at the Treasury 
that will be remembered to his credit, and his secreta¬ 
ryship will be recalled as one of the most disastrous 
epochs in the financial history of the United States. 

The new Secretary makes no pretension to great ac¬ 
quirements in economic science, but in this he is an im¬ 
provement on his predecessor, who ignorantly fancied 
himself a great financier. But General Bristow has a 
reputation as a lawyer of high character, extensive 
learning and signal ability. He has all that the most 
“loyal” could ask in the shape of a war record. He 
was Solicitor-General, or First Assistant Attorney-Gen¬ 
eral while the now forgotten Akerman was at the head 
of the department of Justice, and won universal praise. 
When Mr. Williams was nominated for Chief Justice, 
General Bristow was to succeed him as Attorney-Gen¬ 
eral, and the country hoped for that change at least. 
He is unusually popular with men of all parties, is be¬ 
lieved to be a thoroughly honest man, and received on 
Tuesday the compliment of a unanimous confirmation 
by the Senate. 

The lack of financial training is of far less conse¬ 
quence under our system than it would be in most gov¬ 
ernments. The Secretary of the Treasury is responsi¬ 
ble for no policy, and hence the office does not attract 
men who have financial ide is that will bear the test of 
trial. It is true that the officer who holds this port¬ 
folio is but a sort of chief clerk. Whether this is a 
wise system or not we cannot now discuss, but the fact 
that it is so will serve to reconcile us to a Secretary 
who confesses but slight acquaintance with finance, so 
long as he proves himself a man of brains and of in¬ 
tegrity. 

The Veto iu Europe. 

[Letter from an American merchant in Italy.] 

Rome, May 7,1874. 

I had given up all for lost on the currency question, 
when I was electrified, on my arrival here, by Gen. 
Grant’s veto, which has given me new courage and 
hope for the country. I wish we could disabuse our 
Western friends of the utterly ridiculous idea, that the 
issue of more currency is “aboonto the toiling millions,’’ 
and is, therefore, resisted by capital in antagonism with 
labor. Capital and labor are never necessarily in an¬ 
tagonism, except where the former is aided by monop¬ 
oly, the result of unjust legislation. Here iu Italy, 
capital seems greatly wanting, and labor is underpaid 
and ill-employed. In England, capital has a virtual 
monopoly of everything, including land; and yet, by 
the wholesome influence of free trade and a sound cur¬ 
rency, labor has a better chance than anywhere else, 
except in America. 

Oakes Ames said to a man who insisted that another 
$150,000,000 of currency was wanted immediately, 
“Very well, there are thirty million people to share it, 
your share will be $5,—here it is, take it and be satis¬ 
fied.” But the truth is, not only that no part of any 
new issue of currency gets into the hands of the poor, 
but, on the contrary, that every such issue allows banks 
to increase their liabilities, by lending more credit to 
speculators, enabling the latter to hold more merchan¬ 
dise and real estate out of the market, and so drive up 
prices, until the whole machine of credit breaks down 
by its own tension, and the “toiling millions” 
are thrown out of work altogether, and that by 
hundreds of thousands. There never was a more fatal 
engine of oppression for the poor than this same irre¬ 
deemable currency. Nothing but the great abundance 
of land, and consequent outlets for labor has prevent¬ 
ed this fact from becoming manifest long ago. 


NO. 18. 


There are two other points, however, which I have 
always felt to be the strong ones in our argument, be¬ 
cause they rest on fundamental principles, and are 
patent to the commonest understanding. (1). The 
first is, that it is utterly dishonest for any government, 
corporation, or individual to repudiate a positive prom¬ 
ise or contract, or to postpone its fulfilment beyond 
what absolute necessity requires. (2). The second point 
is, that a correct and sound measure of value is as in¬ 
dispensable to the development of national industry as 
a correct measure of length or weight or capacity. In¬ 
deed, it is far more essential than any one of these,for it 
applies to every product and reward of industry, how¬ 
ever measured or weighed, produced, distributed or ex¬ 
changed. Here is the fatal defect of Kelley’s, and all 
similar plans, which consist of mere exchanges of vari¬ 
ous kinds of paper, all equally worthless, because all 
equally unredeemed by anything of tangible value. 

If money is to be a real medium of exchange and 
measure of value, you can no more determine by leg¬ 
islation how much money a community needs or can 
have, than how many horses, or coaches, or cars, or 
railroads, or yardsticks. Whoever wants it, will of 
course have it, if he can afford to pay for it, otherwise 
he must do without it. When I was a boy we had little 
money but much comfort, and low prices of everything 
essential to the enjoyment of life. If money, or what 
is called money, increases faster than the average wealth 
of the people, it necessarily goes, for the most part, 
into few hands and becomes a powerful instrument of 
monopoly and oppression. Some day or other the 
American people will find this out, but perhaps not so 
soon as Carl Schurz seems to anticipate. What noble 
protests were made by him and others in the Senate! 

I trust that Gen. Grant’s veto will have a powerful 
influence in the country. It is a great thing to have a 
plain, matter-of-fact, honest mind, like his, fairly com¬ 
mitted to the right side ; and the reason given by him, 
as I understand, for his decision, is amusing as well as 
unanswerable from its very simplicity. I do not believe 
that any expansion of the currency can be carried 
against his veto; and if he remains firm, we are safe 
for three years, during which time it may be possible 
to make a beginning towards the redemption of green¬ 
backs in gold. I suppose the great obstacle in our way 
is the debtor interest, including the whole national bank 
interest, as well as multitudes interested in new rail¬ 
roads, real estate, speculations, &c. I believe that the 
true and permanent interest, even of these classes, de¬ 
mands a return to specie—but even if it were not so, 
what right has a small fraction of the population, already 
unjustly favored by legislation, and tasking the people 
beyond all reason, to claim still further advantages at 
the expense of truth, honesty and justice, and to go on 
plundering the masses of the people under protection 
of the law t 

I have not seen the articles of Mr. Bockus which 
you mention, but I entirely agree in the propriety of 
forbidding banks to count gold in their general reserve, 
so long as they are not prepared to pay it out to gener¬ 
al depositors. Why they should not be allowed to lend 
on the security of gold is not so clear. They areal- 
lowed to lend on mortgages, (which, by the way, I 
think is very wrong) and I presume they lend on any 
negotiable security, and surely gold is as safe and con¬ 
vertible as any other ; though of course the gold thus 
held by them should not be counted in their cash re¬ 
serve. I fear, however, that all these minor provisions 
will effect very little, unless accompanied by a com¬ 
prehensive and self executing plan for the redemption 
of greenbacks and of national banknotes by the United 
States Treasury ; which, you know, is what I have ad¬ 
vocated. i. s. a. 

- * - 

The Legal Tender Act. 

SUPPOSE IT WERE REPEALED-WHAT THEN ? 

BY EDWARD ATKINSON. 

Mr. Edward Atkinson, a sound and ingenious writer 
on financial subjects, has printed a pamphlet on the 
present State of the legal-tender question, from which 
we make a few extracts below: 

SUSPENSION BY STATUTE. 

Suspension enforced by statute such as now afflicts 
us, is evil in itself, causing disease and corruption 
throughout the body politic. The enactment of the le¬ 
gal tender law made specie payment practically impos¬ 
sible among the people, and resumption is equally im- 































64 


THE FINANCIAL RECORD. 


possible until the act is repealed. The law is an insur¬ 
mountable obstacle to specie payment, and the only 
remedy is the removal of the obstacle; that is, the re¬ 
peal of the act. It does not follow from this necessity 
that all the notes must be either paid or withdrawn 
from circulation at one time. They may continue to a 
considerable extent in common use, and the Govern¬ 
ment may have the benefit of a large circulation of 
notes at par in specie for some time even after they 
have ceased to be a legal tender; but the condition pre¬ 
cedent to such notes being brought to par and main¬ 
tained thereat, is that nothing shall continue to be a lega 
tender for the payment of debts, except specie. The 
legal tender clause is an injury and not a benefit to the 
Government note itself, and is, at the same time, an in¬ 
surmountable obstacle to specie payment among the 
people. Its whole effect is evil, and nothing but evil. 
The fact that Government notes in limited amount may 
circulate at par in specie and with specie is not in itself 
conclusive evidence that such notes ought to be issued. 
That question is one of expediency and will not be 
treated here, but I state the fact now in order to prove 
that the restoration of the specie standard may be far 
easier than it is generally considered, and that it is neith¬ 
er necessary that Government should provide golc 
enough for the actual payment of all the notes outstand¬ 
ing at one time, nor immediately levy a tax sufficient 
to pay the interest on the entire loan represented by 
these notes. They have uses that will cause them to 
continue to circulate to a limited amount even if they 
cease to be a legal tender; their being receivable for 
taxes is one use, and if they were made convertible 
into a bond at 4 or 4 1-2 per cent interest, it is very 
certain that they would continue to circulate even after 
the bond had risen to par in gold, because they are 
more convenient than gold, because many people have 
more confidence in them than in bank notes, and be¬ 
cause many would choose to hold them as money 
under such circumstances rather than be charged with 
the care of gold itself. 

EFFECTS OF A REPEAL OF THE LEGAL TENDER LAW. 

If then it be admitted that the legal tender act is in 
itself the only obstacle to the resumption of specie pay¬ 
ment, what reason is there against its unconditional re¬ 
peal? It is necessary‘to consider this proposition in 
order to come to the more suitable suggestion of con¬ 
ditional repeal? Let us consider for a moment what 
would be the condition of affairs, if Congress were at 
once and without warning, to repeal the act whereby 
United States notes are made a legal tender for debts 
due. The only legal tender for sums below five dol¬ 
lars, would then be silver, and above five dollars would 
then be gold dollars of standard weight and fineness. 
The suspension of specie payment would upon such re¬ 
peal, change from a legally enforced suspension to a 
commercial suspension; that is to say, the business 
community would not at once pay specie because it 
would not have specie at once to pay with ; but does 
it follow that every one in debt would fail? Would 
not the liquidation of indebtedness proceed as it pro¬ 
ceeded in 1857 and in 1830, when specie payment had 
been suspended by the banks, or as we may say,, by 
voluntary action and not by legal compulsion? If, 
when the legal tender function had been taken away 
from the notes, convertibility into a 4 1-2 per cent bond 
should be given them, would not the liquidation of in¬ 
debtedness by means of them proceed with little or no 
difficulty ? 

The creditor whose credit had been extended to a 
debtor, upon his promise to pay legal tender notes, 
would receive notes convertible into 4 12 per cent 
bonds in place of legal tender notes, rather than put 
the debtor into bankruptcy and take the chance of a 
dividend, even in gold. Why do creditors continue to 
take bank notes in liquidation of debts after banks 
have suspended payment in commercial crises ? Is it 
not from self interest, and because business men know 
that they must sustain and accommodate each other? 
The manufacturer and wholesale dealer would not in¬ 
sist upon payment of all his dues in specie, even if of¬ 
fered notes not a legal tender, but only convertible into 
bonds worth at the time but ninety cents on a dollar 
in gold, because he would know that such a course 
would bankrupt his best customers. It is safe to assert 
that if the legal tender act were repealed to-morrow, 
and the greenbacks were made convertible into a 4 1-2 
per cent bond worth only ninety cents on a dollar in 
specie, the liquidation of almost the entire commercial 
indebtedness of the country would nevertheless be made 
in these notes, and by such liquidation each commer¬ 
cial creditor would receive substantially the same val¬ 
ue that he had lent, because the legal tender notes 
have for a long period been at about 90 per cent in gold; 
111 11-100 being the rate of gold at which the notes are 
worth ninety, and the average rate having been 111 1-4 
for six months ending April 30, 1874, it is safe to say 
that all commercial debts now stand very nearly at the 
rate of 90 per cent in specie, and any creditor upon a 
commercial loan who receives payment in notes worth 
ninety cents, would now get an equivalent for what he 
lent. It needs but a moment’s thought to perceive that 
no merchant or manufacturer will require more than 


this of the jobber, neither will the jobber demand more 
of the retailer, nor the retailer of the consumer, because 
the good-will and continued custom of each is of far 
more value than any possible profit that could be 
made by suing for gold. Neither would there be any 
dfficulty in making bargains for the payment of wages 
in United States notes, rather than in gold, during this 
period of voluntary suspension. There never has been 
any such difficulty, and there would not now be. 

SOME PLAIN TRUTHS. 

This matter has been treated as if the moment specie 
payment is restored an instant demand is to be made 
lor the payment of all debts, and that every one who 
has a claim for money will call it in; but this idea is 
absurd, and to refute it it needs only some simple facts 
to be restated. Nobody makes money; those who are 
said to make money and become rich only make rail¬ 
roads or spindles or works or warehouses. Nobody 
keeps money; bankers keep money in circulation as far 
as they can, and keep as little idle as safety will per¬ 
mit. Nobody wants money except to spend. There¬ 
fore it is absurd to suppose that because our money, 
now being very bad, is made good that it will be less 
used. Far from it; what we do need is money that 
shall be a just and uniform standard of value, and when 
this point is gained gambling will cease to take the 
place of commerce. Commerce in the true sense, th%t 
is, a mutual exchange of products for mutual benefit 
will vastly increase. When the Government ceases to 
enforce the use of a fluctuating and unfit medium of ex¬ 
change, mutual confidence will take the place of dis¬ 
trust and jealousy among the States. Even the pres¬ 
ent Congress might be depended upon to enact suita¬ 
ble measures, if once assured of the determined purpose 
of their constituents to insist upon a decisive policy. 
The number of members who are representatives of 
“Butlerism,” and who would willfully and for base pur¬ 
poses, tamper with the currency, is very small, al¬ 
though a very large number are apparently imbued 
with the false ideas regarding the nature and function 
of money, which have, in times past, misled other na¬ 
tions. The latter need only time to consider the sub¬ 
ject, to become entirely disgusted with their present 
views. To this end, the vigorous discussion among the 
people now tends. 

I have said that when the legal tender act is repeal¬ 
ed, true commerce will be more active, not less,—be¬ 
cause it will be safer. The gambling profit of the few 
may be less but the general benefit will be greater, and 
as a matter of course there will be a greater incentive 
to production and exchange. Also as a matter of 
course, all business men will begin to adjust themselves 
to the new conditions and to prepare for a resumption 
of specie payments on all new contracts, precisely as 
they hav^ done in previous commercial crises, after the 
suspension of the banks. Specie payment being the 
only normal“and wholesome condition of trade, it fol¬ 
lows, as a matter of course, that when over-trading or 
bad crops or some other cause have brought about an 
ordinary suspension, every business man begins to ad 
just himself to the process of cure, that is, to regulate 
his affairs so as to get back as soon as may be to a nor¬ 
mal condition, and if the legal tender act were repeal¬ 
ed, they would take the same action now. If the legal 
tender act were repealed to take effect after a given 
future date, say in 1876, it is very certain that all large 
transactions would be on a specie basis long before 
that date, simply because it would be most profitable 
to all parties to make them so. 


The Depression of Business. 

SOME PLAIN TRUTHS WELL TOLD. 

[From a speech by Hon. G. W. Scofield (Penn.) in Congress, 
May 19, 1874.] 

Why do not. people buy as heretofore ? Where have 
the consumers disappeared ? They have not been 
swept away by pestilence or war. Our population has 
not decreased. They have the same property, though 
not always the same nominal value nor always in the 
same man’s hands, but they have the same houses, 
lands, and chatteb which they had lastyear; but some¬ 
how or other they have no stomach for consumption. 
If Congress could only give them an appetite, induce 
them to buy the coal, iron, lumber, oil, carriages, furni¬ 
ture, and the various luxurious fabrics now ever seek¬ 
ing a market, all these workshops would again be busy. 
Why, then, do they not buy ? Why do they not con¬ 
sume ? "Because,” we are told, ‘‘they have no curren¬ 
cy with which to make the trade.” "There is not cur¬ 
rency enough in the country to do the business.” The 
manufacturers are on hand, as we know, with their 
products to sell, and the former consumers are on hand, 
and, as it is alleged, with capital to buy ; but the trade 
cannot be made because, as it is said, there is no cur¬ 
rency, no bills, no medium by which the transfer can 
be effected. The suggestion that the consumers, that 
is the people, do not want to buy ; that many of them 
have no capital with which to buy ; and that all have 
come to the conclusion that they cannot afford to buy, 
is set aside as too absurd for consideration. There is 
nothing in the way, they insist, but a lack ofcurren- 
.cy. 


****** 

Congress is expected to persuade somebody to buy 
what somebody else offers for sale. That .‘‘revives 
trade;” that ‘‘starts business ;” that ‘‘relieves the coun¬ 
try.” ‘‘Give us buyers,” is the prayer of the manufac¬ 
turers, producers, and vendors, burdened with last 
year’s stock or last speculation. I earnestly wish we 
could answer that prayer by furnishing purchasers for 
the surplus of those deserving manufacturers. Then 
they could manufacture mere and thus give employ¬ 
ment to the laboring people. But consumers say they 
have aheadv bought too much, more than they could 
well afford to do; that they are somewhat in debt for 
what they have already consumed, and therefore they 
must economise and buy less until they catch up. The 
thoughtful manufacturer 6ees the situation and the 
helplessness of Congress in the premises and reduces 
his production, slowly and cautiously, to protect as far 
as possible his employees. I trust they may not have 
long to wait. Consumption by the economy and 
growth of the country will soon come up to its former 
demand, and then manufacturing will be as lively as 
ever. 

But there is another class of vendors less reasonable 
and less deserving. They are speculators who have 
been caught with corner lots, city additions, land-grabs, 
timber monopolies, coal lands without coal, oil lands 
without oil, gold mines without gold, with railroad 
charters and paper towns, and with bonds and stocks 
in everything uncreated. They will tell you that if 
confidence had only held up for a day or a week or a 
mpnth longer, they would have had their cash in hand, 
and then a great many confiding and honest people 
would have been caught in the crash instead of them¬ 
selves. As it is, they have left many victims all over 
the land. These gentlemen, with an audacity that 
characterizes their calling, assume* to be the people, 
and in their name keep up a steady "ding-dong” for 
the ‘‘restoration of confidence,” and confidence they 
allege can only be restored by watering the currency. 
****** 

What do they mean by “restoring confidence ?” 
Confidence in what? Confidence that a man has en¬ 
larged his wealth because it is valued by a lower stan¬ 
dard, and that therefore he can afford to borrow, ex¬ 
pend, and live extravagantly ? Confidence that wa¬ 
tered stocks and premature improvements are good in¬ 
vestments for the hard earnings of the people, or a good 
bank collateral for a sixty day note ? Confidence that 
the wealth and population of your town is double what 
the census made it, and that it will again double in two 
or three years, and therefore you can afford to issue 
bonds, project extensive improvements, and convert 
farms into city additions ? 

This would rather be the restoration of the credulity, 
the delusion which is the cause of all our trouble. Who 
would be benefited by such a revival ? It might ena¬ 
ble one class of citizens to work off their unsuccessful 
enterprises, their unsalable property and bad specula¬ 
tions upon their neighbors, but those neighbors would 
be less able to bear the misfortune than those upon 
whom it originally fell. But you cannot revive “confi¬ 
dence” suddenly, even by order of Congress. You 
may shorten the measure so as to duplicate distance, 
but the deception in this day of inquiry will be sus¬ 
pected. Tell a prudent man, accustomed to keep a lit 
tie surplus for emergencies, a pond into which the small 
accretions of his industry flows, and seeing that surplus 
half drawn off by the extravagance of the -times, shuts 
down the waste gate—tell him to open that gate again 
and go on expending, that Congress will fill the pond 
by providing that six inches shall make a foot, would 
he believe you? Would he act upou your advice? 
Tire speculator below the gate, hoping to acquire the 
prudent man’s earnings, might listen to you, but the 
man above would suspect you for a rogue. Grown 
people.no more than children, play with fire while the 
old burn is smarting. I suppose this delusion, miscall¬ 
ed confidence, will come slowly back of itself. It takes 
time, but it will come. It is periodic like locusts, and 
epidemic like fanaticisms. In a few years we will again 
fall under the influence of expanded credit. We will 
again imagine we are getting rich without additions to 
our property, and again begin to borrow, expend and 
speculate, and call it making money. But for the pres¬ 
ent the people will be distrustful, cautious and frugal, 
let Congress do what they will. 


Spirit of the Press. 

[St. Louis Democrat.] 

We have urged expansion of the currency, and have 
treated with contempt the slander that so-called infla¬ 
tionists were simply repudiationists in disguise. But 
we do not propose to be saddled with the responsibility 
for the sayings and doings of a set of inflationists who 
are repudiators, with or without disguise. It has been 
the misfortune of Republicans who sought relief for 
Western interests through expansion of the currency 
that it placed them in discreditable alliance with a set 
of the meanest Bourbon Democrats extant—who hun¬ 
ger and thirst for repudiation because they look upon 
the war debt as a means by which those who are true 










THE FIHAHCIAL RECORD. 


55 


to the Union, and sustained it with their means, now 
compel those who are traitors, in heart or in heed, to 
bear their share of the cost of the war. Whenever this 
is to be made an issue, in State, Congressional, or local 
elections, we tell the repudiators once for all that they 
will find every Republican, whether he has advocated 
expansion or not, fighting them to the death. More 
over, we tell the “Missouri member of Congress” that 
he does not know his Republican constituents if he 
ever made the statement quoted. Mr. Havens is the 
only Republican member whose county is “Republican 
by 300. If Mr. Havens has uttered any such stuff as 
is quoted, and imagines that “a repudiation plank 
would carry” Greene County by 2000 majority, he will 
find himself even more egregiously mistaken than he 
was when he took the salary grab, and imagined that 
his constituents would forget it. 

[Chicago Tribune.] 

People who have been saying—and perhaps think¬ 
ing—that the rear-guard of Western papers would be 
solid for inflation, and would change the anti-infla 
tion majority of our first lists into one against the veto, 
are invited to study this record, corrected up to date : 

. Sustain the Oppose the 
veto. veto. 


Illinois.133 119 

Ttidiaua. 50 80 

Michigan. 89 24 

Wisconsin... 87 28 

Minnesota. 53 7 

Iowa. 86 75 

Missouri. 28 61 

Kansas.. 25 33 

Nebraska.?. 9 8 

660 435 

Total number of psmers heard from.995 

Majority against inflation. 125 


Of the 73 papers heard from since the publication of 
our last list, 27 favor inflation and 46 oppose it. It is a 
sensible rear-guard. 

[N. Y. Commercial Advertiser.] 

In this part of the country both parties are united 
against inflation, and neither can take advantage of the 
other. Should the Democrats accuse the Republicans 
of treachery to avowed principles, because an Inflation 
Bill was passed in a Congress where Republican as¬ 
cendency is pronounced, the latter may retort upon the 
Democrats the fact that so many of them voted for the 
bill, and may point to the veto of the President as 
proof of fidelity to pledges and of regard for the credit 
of the Government. At the West and South, however, 
where parties are not so harmonious on this subject, 
tliere will be room for argument and for such exhibi¬ 
tions of political gymnastics and jugglery as have not 
been witnessed these many years. 

[Cairo, (III.) Bulletin. 

The Republican party in Illinois is largely divided 
on the currency question. . . . The adoption of reso¬ 
lutions for or against inflation will please only one wing 
of the party—to ignore the subject will displease both. 
Whichever choice is made, the currency question is the 
rock upon which the Republican party of Illinois will 
split, and it is directly before them in the stream of 
events. 

[Rockford (Ill.) Register.] 

We believe it was Hierocles who wrote that a philos 
opher during a storm out in mid ocean, bound himself 
to an anchor, remarking that it would be strange if 
what had once saved the ship when driven towards a 
lee shore would not now save him. If Mr. Logan wants 
to tie himself to the anchor because it once held the 
nation during a war storm from drifting among the 
breakers, nobody will complain. But it is quite another 
thing for him to attempt binding the nation to it. They 
have no such philosophic arguments for going down. 
The State Republican Convention can split its constit¬ 
uency and elect the Democratic nominees by follow¬ 
ing the lead of the Springfield Journal; or it can listen 
to the Chicago Journal and pronounce for sound mon¬ 
ey ; or it can decline the matter of platform making and 
nominate men upon their record, character, and ability, 
—leaving future issues to Ire made up on elections 
which call for them. But if a single square issue could 
be made between the policy of offering the people worse 
money, and that of furnishing them better money, the 
latter would be emphatically adopted. 

[Bloomington, (Ill.) Pantagraph.] 

The Illinois State Journal still insists that the Repub¬ 
lican party must endorse Logan, Oglesby and inflation, 
in “specific terms but the Pantagraph responds : 

There is a very fnaterial division of opinion, among 
the Republicans of Illinois especially, that the passage 
of a serious inflation resolution, couched “in the stron¬ 
gest terms," by the State Convention, will simply split 
the Republican party of Illinois into two nearly equal 
parts. . . . The simple truth is that there is a very 
great and widespread difference of opinion among the 
Republicans of Illinois on the currency question. 

[Independence (Kan.) Democrat.] 

The leaks in the national treasury caused by means 
of overdrawing and misapplication have exhausted the 
government funds, and hence there is a great clamor 
for more currency. Congress thought the easiest way 
to supply currency was to issue more greenbacks. 
President Grant thinks greenbacks are as plenty as the 
welfare of the country will warrant, and therefore kind¬ 


ly advises Congress to supply treasury deficiencies by 
additional taxation. Additional taxation will further 
alarm some of the faithf ul Republican followers, which 
may result in a loss of votes to the Republican cause. 
There are one or two suggestions that bothCongress and 
the President overlooked. Economy and honesty in the 
administration of government affairs would prevent the 
necessity of either more inflation ora greater taxation. 

[Oskaloosa Independent.] 

We were in St. LouiS at the time the veto went over 
the land, and took pains to ascertain the feelings and 
views of business men on the subject. We found that 
every merchant or dealer of any kind who was doing 
a solid business on his own capital, or nearly so, was in 
favor of the veto, while those who were shaky, who 
had purchased their stock on time, were opposed to it. 
The reason was evident in both cases. The merchant 
who is doing business on borrowed capital, or credit, 
which is practicaliy the same thing, is desirous of infla¬ 
tion because it will advance the price of his goods, and 
the advance will more than balance the interest he 
pays. But it. is plain that if he pays for his goods in 
currency at 75 cents on the dollar, when his goods were 
purchased at a time when currency was 87 12 cents on 
the dollar, then he practically defrauds his creditors out 
of 12 1-2 cents on the dollar. The merchant who paid 
for his goods at 87 1-2 cents on the dollar ought not to 
be put to the disadvantage of competing with his neigh¬ 
bor who pays 75 cents on the dollar. These are plain 
business propositions, and explain why the solid busi¬ 
ness man favors the veto, while the unsubstantial ones 
dislike it. 

[Detroit Tribune.] 

The Detroit Tribune after citing extracts showing the 
position taken by its Michigan exchanges of all parties, 
on the subject of the President’s veto of the Currency 
Bill, sums up : “Of these papers seventy-four, or con¬ 
siderably more than three-fourths, endorse the veto in 
unmistakable terms, sixteen—less than one fifth—con¬ 
demn it more or les? decidedly, and six seem to be on 
the fence. These figures tell their own story, and speak 
with emphasis the sentiment of the people of Michi¬ 
gan.” 

[San Francisco Bulletin.] 

In the dehate on the veto there were no indications 
of any intention to continue the fight. Logan simmer¬ 
ed down to absolute docility, and two days after was 
found complimenting the President for his general sa¬ 
gacity. Morton had little or nothing to say, but within 
a week or so he has written a letter to his “organ” at 
Indianapolis, taking the astonishing ground that the 
bill vetoed by the President was really one for con¬ 
traction. And this in the face of i lie undoubted fact 
that all the arguments which he put forward were argu¬ 
ments for inflation ! The scheme is evidently very dead. 
There is no chance of the passage of any inflation bill this 
session, unless it is covered up in so intricate a mathe¬ 
matical puzzle that neither press, people, nor President 
can find It out in time. 

[Indianapolis News.] 

Business is gradually but surely reviving as confi¬ 
dence increases with the belief that the finances will 
not be tampered with this year. The business men 
who remember 1868, the year succeeding our great 
panic, say that there can be no comparison between 
the condition in that year and this. The times are 
, nothing like so hard as they were then, business of all 
kinds is doing much better, and everything points to a 
rapid return to sound and profitable times. We shall 
not go up to the inflation point for some j ears, and 
those who expei t to get a great deal of something out 
of nothing, might as well dismiss their hopes and go to 
work. 

[Cincinnati Commercial.] 

No people can, without degenerating and starting 
upon the down-hill road to ruin, afford to run in debt 
for their government expenses in a time of peace and 
plenty—both of which the United States has enjoyed 
for now more than nine years. We should, as good 
business men do, before we run in debt and issue our 
promises to pay therefor, ask ourselves how we are go¬ 
ing to pay, and what embarrassment and distress such 
payment will inflict upon us. No great debt can be 
paid without causing both. Inflationists do not look 
beyond their noses when they expect to obtain real 
relief by incurring more government debt. 

[St. Louis Dispatch.] 

Do you know, talking about “repudiation,” that the 
feeling is spreading that the cheapest way to get rid of 
the public debt and the burden it entails, is to consider it 
no debt at all, and that the studied course of the Shy- 
locks of the East, in adhering to the terras of the bonds, 
and demanding their pound of flesh, is likely to make 
all their goods “confiscate to the State V’ I heard a 
Missouri member of Congress say the other day—a Re¬ 
publican at that—that the repudiation plank would car¬ 
ry his county by 2000 majority, and it is now Repub¬ 
lican by 300. 

[MilwauMe Wisconsin.] 

If acting Vice President Carpenter is fortunate 
enough to select a Senate committee capable, judicious, 
and influential, a compromise measure will pass both 
Houses, and be signed by the President. We know 
sufficient of Blaine’s character to be convinced that the 


House Committee will be of the very timber required by 
this exigency. We are anxious for a compromise, be¬ 
cause we profoundly believe that if a free banking bill 
can pass with sufficient limitations, accompanied by the 
ultimate retirement of greenbacks, the paralysis ol busi¬ 
ness interests will slowly pass away, and the vigor and 
vitality of other and better days will spread itself over 
all this great country. 

[Iowa City Republican.] 

We have talked with many men of all classes, and 
have not as yet found the first one in favor of inflation. 

It is a great error to suppose that Iowa is rampant for 
inflation. 

[New York Express.] 

The make-up of the Conference Committees—Morton 
and Merrimon in the Senate, or two to one against the 
people, with a like committee in the House, is not a hope¬ 
ful sign for a good law. The House Committee is upon 
the same low plane of ideas respecting the Currency. 
While Parliamentary custom or law requires this re¬ 
spect for majorities, it shows how tar the miscalled rep¬ 
resentatives of States and people can go from the set¬ 
tled judgment and wishes of the people. 

[Chicago Times.] 

It is not supposable that any bill which does not pro¬ 
vide for inflation can pass both Houses. And no infla¬ 
tion bill can receive, the executive approval, unless Mr. 
Grant concludes to abandon the position assumed in 
the veto message, for the sake of promoting peace in 
the party. Mr. Grant is not likely to do any such 
thing. He cannot, without alienating the great num¬ 
ber otjfriends he secured by the veto, and doing more 
to disrupt the party than he possibly could by a second 
veto. Expressions of approval have been forwarded 
to him from all quarters since the veto, and he cannot 
but be satisfied that at least four-fifths of the educated 
and intelligent people of the country, if not a majority 
of the whole people, heartily approve of his course. He 
has made enemies of the inflationists, and cannot possi¬ 
bly propitiate them except by a complete surrender, 
which would lose him the support of the friends of hon¬ 
est money, and cost him the respect even of the infla¬ 
tionists themselves. 

[Editor of the Fort Dodge, (Iowa) Messenger to the Finan¬ 
cial rkcord.1 

We consider the editors ot this sheet both Liars and 
thieves and not as respectable as High way Robbers ; 
you will therefore accommodate us by sending no more 
to this office. 

Senator Thurman’s Views. 

We have given our readers two speeches of Senator 
Thurman of Ohio, on the paper-money question. Late¬ 
ly he has been interviewed by a reporter who thus 
quotes him: 

“Certain men hope to embark the Federal Govern¬ 
ment in ail manner of schemes of internal improve¬ 
ment, that could not fail, if undertaken and prosecuted, , 
to double the public debt and immensely increase the 
burden of taxation, already too great, to say nothing 
of the corruption that would surely follow, and central¬ 
ization of power in the Federal Government that would 
necessarily result. And then there are other men who 
favor inflation because they believe it would eventuate 
in repudiation. And then there are yet others who 
have their own particular axes to grind—men who 
want to unload their unsalable lands, stocks, &c. There 
are doubtless very many good people who believe in 
inflation because they have been misled by the sophis¬ 
tries of the inflationists and the delusive cry of ‘more 
money,’ as if the wealth of the country could be add¬ 
ed to by stamping bits of paper, or by the Government 
issuing more promises to pay, and thereby increasing 
the public debt.” 

“The Senator stopped speaking, and I said: ‘Well, 
Judge, you talk like an old-fashioned hard money Dem¬ 
ocrat.' ‘And that is precisely what I am,' replied ho. 

‘I remember,’ he continued, ‘that when we were much 
younger than we now are, one of our State Conven¬ 
tions adopted a brief resolution like this : “Hard mon¬ 
ey is the onl^ currency that defrauds no man.” I 
think those are very nearly if not the exact words. 
Well, I drew that resolution because I believed it to 
be true. The Convention adopted it; it was the chief 
plank in the platform, and we carried the State. It 
was re affirmed again and again by subsequent Slate 
Conventions, and if you will look at the election re¬ 
turns, I think you will find that we w^re generally suc¬ 
cessful when that wa9 our chief plank, and last year we 
put a sound plank on this subject in our platform, and 
we redeemed the State. The Democracy of New 
York adopted it and redeemed their State. This spring 
New Hampshire and Connecticut stood upon it, and 
they are redeemed.'” 

We sent our readers last week an extra with por¬ 
tions of Senator Chandler' speeches—this week anoth¬ 
er containing the excellent speech of Senator Jones of 
Nevada, and shall send next week another containing 
extracts from the speech of Mr. Mitchell, a member of 
Congress from Wisconsin. Please read and circulate 
them all. 

































































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FINANCIAL RECORD. 

‘‘WE NEED ONE THING BESIDES MORE MONEY, AND THAT IS BETTER MONEY ."-Senator Zach. Chandler. 


VOL. I. 


The Financial Record will be continued until further no¬ 
tice and will be sent free of postage, to all persons who will re¬ 
mit 50 cents to the publishers. All editors who receive it are 
invited to send their papers in exchange, it will be no longer 
published by the American Social Science Association, 
but for the. present, as heretofore, communications respecting it 
may be addressed to the Secretary of the Association, F. It. San¬ 
born, No. 5 Pemberton Square, (Room 21,) Boston; aud all ex¬ 
change papers, public documents, etc., may be forwarded to the 
same address. 


The Spirit of Congress. 

The chances of the approval of any currency bill 
that is likely to pass Congress have been so seriously 
affected by the appearance of the President’s mem¬ 
orandum, that but little interest has been taken in the 
progress of the compromise on which the Conference 
Committee has been at work. Their report was made 
in the Senate on Tuesday. We give a summary of the 
new bill. • 

National banks need hereafter keep on hand no money 
as reserve against their circulation. All limitations of the 
amount of national bank currency to be issued, are re¬ 
moved. Banks shall keep legal tenders equal to five 
per cent of their circulation with the Treasury depart¬ 
ment, for the redemption of notes, and redemption will 
be wholly performed by the bapk issuing notes or by 
the Treasury. Banks may by depositing legal tenders 
receive back their bonds in excess of $50,000, and the 
Treasury shall redeem and destroy an equal amount of 
bank notes. The legal tender circulation is fixed at a 
maximum of §382,000,000, to be reduced by 37 1-2 per 
cent of the new issues of bank notes under the free 
banking law, until the maximum is reduced to $300,000- 
000; the notes withdrawn to be carried to the account 
of the sinking fund, canceled and not reissued; and if 
the surplus revenue is not sufficient to provide green¬ 
backs to be so canceled, they may be procured by a 
sale of bonds. On the 1st of January 1878, legal tenders 
may be funded in any bonds authorized by existing 
law, or redeemed in gold at the pleasure of the Secre¬ 
tary of the Treasury; but these notes shall be reissued, 
either for coin, to redeem debt already due in the pur¬ 
chase at not less than par of bonds not due, or in pay¬ 
ment of current expenses. Nothing in the act is to 
increase the public debt. 

The bill will probably be sent to the President and 
vetoed, the confident assertions of some Congressmen 
to the contrary notwithstanding. The compromise 
was agreed to by Senators Morton, Sherman and Mer- 
rimon, and by Representatives Maynard and Parwell. 
Mr. Clymer alone of the Conference Committee refused 
to sign the report. It has not yet been acted upon, 
but Mr. Morton called it up yesterday. 


A Memorandum Not to Be Forgotten. 

The President has once more astonished the coun¬ 
try; and this time with a semi-official announcement 
of his views on finance that proves how much he has 
thought and how much he has learned since this ques¬ 
tion became the leading issue in American politics. 
Gen. Grant shows by the “memorandum” sent to Sen¬ 
ator Jones that he has set his heart upon the resump 
tion of'specie payments, as the crowning achievement 
of his administration; and that he will sign no bill that 
might tend to postpone for an hour the fulfillment of 
the long-standing but neglected promises of the Gov¬ 
ernment to its patient creditors. 

Not only is the announcement of such a policy clear, 
distinct and unmistakable, but it is accompanied by the 
outline of apian for providing us honest money, that 
with some material amendments, may serve as the basis 
of a scheme to be urged by all hard-money men through¬ 
out the country. As will be seen, it is a modification 
as to time only of Judge Hoar’s proposition for a condi¬ 
tional repeal of the legal tender act, followed, a year 
later, by an offer to redeem all Treasury notes in coin. 


FRIDAY, JUNE 12, 1874. 


The common use of coin by the people if practicable, 
would render the accumulation of a sufficient stock of 
the precious metals an easy matter, when assisted by 
anew gold loan. The President further proposes to 
compel this common use of coin by a rapid withdrawal 
of the small issues of national banks, substituting for 
them bills of higher denominations. Here we have a 
complete scheme for specie resumption : 1st, a return to 
specie values by repeal of the legal tender act, without 
contraction: 2nd, redemption of greenbacks just as long 
(and no longer) as they are at a discount, when they 
will be convertible, but not converted, into gold ; and 
3d, a device for restoring the use of money in trade. 

This plan is far from feasible; but it is put forward mod¬ 
estly, though with strong assumptions and cogent facts, 
and altogether in such a way as to compel the applause 
of those who have been fighting, against apparently 
hopeless odds, the battle for honest money. While the 
President’s “memorandum” has filled the advocates of 
specie payments with joy, it has caused conster¬ 
nation and dismay in the inflation camp. It gives 
the en^my no ground of hope. They waste their time 
when they exercise their ingenuity in concocting com¬ 
promises. There is to be no inflation, in any disguise. 
They threaten vengeance, they predict the utter dis¬ 
ruption of the Republican party ; but the President is 
unmoved. He knows he is right, he believes the 
country will sustain him—and what is the Republican 
party to him ? A party that can only live by breaking 
a pledge to deal honestly with the creditors of the gov¬ 
ernment, is not fit to exist. Let it die if it can live 
only on a diet of broken promises. As we lately saw, 
the politicians have not yet obtained full control of the 
people. The developments that followed the veto 
show that the people are really opposed to inflation. 
Let one Republican State Convention declare for infla¬ 
tion and the stampede to the opposite ranks would as¬ 
tonish the wild-cat party. A mau may vote for candi¬ 
dates whose opinions on minor issues differ from his 
own. But when it comes to a vital question, one in¬ 
volving fair-dealing and good morals, no party ties will 
bind him. If the President’s stand for honesty breaks 
up the Republican party, so much the worse for the 
party, but so much the better for the President and the 
country.__ 

An Appendix to the Veto. 

THE PRESIDENT ON SPECIE PAYMENTS. 

Since our last issue the following correspondence on 
the financial question between the President and Sena¬ 
tor Jones of Nevada has been obtained for publica¬ 
tion : 

United States Senate Chamber, 1 
Washington, June 4, 1874. ) 

To the President :—I was so deeply impressed by the 
clearness and wisdom of the financial views, some of 
which you have fortunately reduced to writing, recent¬ 
ly expressed by you in a conversation in which I had 
the honor, with a few others, to be a participant, that I 
cannot dismiss them from my mind. The great diver 
sity of ideas throughout the country upon this subject, 
and the fact that public opinion concerning the same is 
still in process of formation, lead me to believe that the 
publication of these views would be productive of great 
good. I venture, therefore, to request of you that I may 
have a copy of the written memorandum to which I 
have alluded, with your permission that it may be made 
public. I have the honor to be, 

Very respectfully, 

,Your obedient servant, 

John P. Jones. 

Executive Mansion, Washington, D, C., ) 

June 4,1874. ) 

Dear Sir : —Your note of this date requesting a copy 
of a memorandum which I had prepared, expressive of 
my views upon the financial question, and which you, 
with others, ha,ve heard read, is received, but at too 
late an hour to comply to-night. I will, however, take 
great pleasure in furnishing you a copy in the morning, 
as soon as lean have it copied. It is proper that I 
should state that these views were reduced to writing 
because I had been consulted on this question not only 
by some of the members of the conference committee, 
but by many other members of Congress. To avoid 
any and all possibility of misunderstanding I deemed 
this course both justifiable and proper. With this ex- 


NO. 19, 


I planation I enclose you herewith the memorandum re¬ 
ferred to. 

Very respectfully, U. S. Grant. 

To Hon. J. P. Jones, U. S. Senate. 

The memorandum is as follows :— 

I believe it a high and plain duty to return to a spe¬ 
cie basis at the earliest practicable day, not only in 
dbmpliance with legislative and party pledges, but as a 
step indispensable to lasting national prosperity. I be¬ 
lieve, further, that the time has come when this can be 
done, or at least begun, with less embarrassment to 
every branch of industry than at any future time, after 
resort has been had to unstable and temporary expedi¬ 
ents to stimulate unreal prosperity and speculation on 
a basis other than coin, the recognized medium of ex¬ 
change throughout the commercial world. The par¬ 
ticular mods selected to bring about a restoration of 
the specie standard is not of so much consequence as 
that some adequate plan be devised, the time fixed 
when currency shall be exchangeable for coin at par, 
and the plan adopted rigidly adhered to. It is not 
probable that any legislation suggested by me would 
prove acceptable to both branches of Congress, and in¬ 
deed a full discussion might shake my own faith in the 
details of any plan I might propose. 1 will, however, 
venture to state the general features of action which 
seem to me advisable, the financial platform on which 
I would stand, and any departure from which would be 
in a spirit of concession and harmony in deference to 
conflicting opinions. First, I would like to see the legal- 1 
tender clause, so called, repealed, the repeal to take ef¬ 
fect at a future time, say July 1, 1875. This would 
cause all contracts made after that date for wages, 
sales, etc., to be estimated in coin. It would correct 
our notions of value. The specie dollar would be the 
only dollar known as the measure of equivalents when 
debts afterwards contracted were paid in currency ; in¬ 
stead of calling the paper dollar a dollar and quoting 
gold at so much premium, we should think and speak 
of paper as at so much discount. This alone would 
aid greatly in bringing the two currencies nearer to¬ 
gether at par. Second, I would like to see a provis¬ 
ion that at a fixed day, say July 1,1876, the currency 
issued by the United States should be redeemed in coin 
on presentation to any .assistant treasurer, and that all 
the currency so redeemed should be canceled and 
never reissued. To eflect this it would be necessary to 
authorize the issue of bonds payable in gold, bearing 
such interest as would command par in gold, to be put 
out by the Treasury only in such sums as should from 
time to time be needed for the purpose of redemption. 

Such legislation would insure a return to sound finan¬ 
cial principles in two years, and would, in my judgment, 
work less hardship to the debtor interest than is likely 
to come from putting off the day of final reckoning, ft 
must be borne in mind, too, that the creditor’s interest 
had its day of disadvantage, also, when our present 
financial system was brought into being by the su¬ 
preme needs of the nation at the time. I would further 
provide that from and after the date fixed for the re¬ 
demption no bills, whether of national banks of the 
United States, returned to the Treasury to be exchang¬ 
ed for new bills, should be replaced by bills of less 
denomination than ten dollars, and that in one year 
after resumption all bills of less than five dollars should 
be withdrawn from circulation, and in two years all 
bills of less than $10 should be withdrawn. The ad¬ 
vantage of this' would be the strength given to the coun¬ 
try against a time of depression resulting from war, 
failure of crops, or any other cause, by keeping always 
in the hands of the people a large supply of the pre¬ 
cious metals. With all small transactions conducted in 
coin, many millions ofit would be kept in constant use 
and. of course, prevented from leaving the country. 
Undoubtedly a poorer currency will always drive the 
better out of circulation. With paper a legal tender, 
and at a discount, gold and silver become articles of 
merchandise as much as wheat or cotton. The surplus 
will find the best market it can. With small bills in 
circulation there is no use for coin, except to keep it in 
the vaults of banks to redeem circulation. During 
periods of great speculation and apparent prosperity 
there is little demand for coin, and then it will flow out 
to a market where it can be made to earn something, 
which it cannot do while lying idle. Gold, like any¬ 
thing else when not needed, becomes a surplus, and like 
every other surplus it seeks a market where it can find 
one. By giving active employment to coin, however, 
its presence can, it seems to me, be secured and the 
panics and depressions, which have occurred periodi¬ 
cally in times of nominal specie payments, if they can¬ 
not be wholly prevented, can at least be greatly miti¬ 
gated. Indeed, I question whether it would have been 

















58 


THE FINANCIAL BECOED 


found necessary to depart from the standard of specie 
in the trying days which gave birth to the first legal- 
tender act, had the country taken the ground of no 
small bills as early as 1850. Again, I would provide an 
excess of revenue over current expenditures. I would 
do this by rigid economy, and by taxation where tax¬ 
ation can be best borne. Increased revenue would 
work a constant reduction of interest, and would pro¬ 
vide coin to meet the demands on the Treasury for the 
redemption of its notes.thereby diminishing the amount 
of bonds needed for that purpose. All taxes after re¬ 
demption begins should be paid in coin or United 
States notes. This would force redemption on the na¬ 
tional banks. With measures like these, or measures 
which would work out such results, I see no danger in 
authorizing free banking without limit. 


The Cost of Inflation. 

ONE LITTLE ITEM IX THE BILL. 

To the Sahib Editor of the Financial Record: 

Sahib. —The poor French savant, in 1793, when con¬ 
demned to the gudlotine, said to his judges, “I lose 
my head because the people have lost their heads; 
you will lose yours when .he people regain their heads.” 
The lamentable financial disturbance of the country is 
simply owing to the fact that the majority of the peo¬ 
ple’s representatives have lost their heads. They, in 
their turn, will lose their heads now that the people arc 
regaining their senses. It has been supposed that truth 
can be proved by figures. Alas! that such proof 
should be a fallacy in a country containing forty mil¬ 
lions of the most enlightened people in the world. B it 
hope is a star that shines brightest when the firmament 
is clothed in its darkest mantle. So say the Eastern 
sages. And I find a great illustration of this poetical 
saying at this moment. The hope, against hope, was 
in the President to stay the fell hand of inflation. He 
no doubt has, as if by magic, dissolved the machina¬ 
tions of tricksters, just as a star dispels the mists about 
it. And while all eyes are turned towards the star of 
hope in the White House, it is but just and fair to il¬ 
lumine that orb by some statistical meteors. Allow me, 
therefore, to furnish a few for your valuable little paper, 
hoping their rays will reach this star of hope. 

This day six months ago gold sold at 109 1-2. Two 
months ago it sold at 113 1-2, or exactly four per cent, 
higher. And it averaged fully four per cent, higher 
since Congress met, until after the veto. Now it is 
111 or 1 1-2, per cent, higher. This advance was 
owing to no other cause than to the strength of the in¬ 
flationists, who were from the first determined to adul¬ 
terate an adulterated currency; the fall in gold is due 
to the veto. Two facts, in connection with the pros- 
pect of inflation, are perfectly patent. One is, that the 
trade of the country was as bad, up to the veto, as it 
was December 1; that real estate and industry was 
stagnant beyond precedent, and that wages actually 
went lower even than in December. The other fact is 
that every article of consumption that had for its foun¬ 
dation, directly or indirectly, a foreign raw material or 
manufacture, has been four per cent, higher than it was 
December 1, 1873 And well would it be if the en¬ 
hancement had been only four per cent. That was the 
estimate upon commodities in wholesale, but the con¬ 
sumer was forced to pay eight or ten per cent, higher 
if he bought (as is the case in ninety-five cases out of 
each hundred) necessaries on a small scale or at re¬ 
tail. But, suppose we take it only at four per cent., let 
me show what the inflation, this past winter and spring, 
has cost the people during the four months preceding 
the veto. 

The actual consumption of goods for which the coun¬ 
try had to pay in gold during these four months (for¬ 
eign products) was, in round numbers, $200,000,000; 
to this must be added duties payable in gold, $55,000,- 
000, and freight $10,000,000. Altogether, then, the 
people of the United States had to find $265,000,000 in 
gold to pay for their necessaries, chiefly sugar, coffee, 
tea, iron, clothing, woolens, cottons, etc., etc., during 
the four months before the veto. In order to pay this sum 
of $265,000,000, gold, they had to raise, in currency, 
$300,775,000, or in other words, pay $35,775,000 prem¬ 
ium ; that is, they bought gold at 113 1 2 to pay for 
it in paper. But if this inflation swindle had not been 
agitated, and gold had stood only at 1091-2. as it was 
in December, the people, instead of paying $35,775,000 
premium on the gold for four months consumption, 
would only have had to raise $25,175,000, or $10,600,- 
000 less. 

Now, can it be denied, can it be argued away, that 
the most deserving, the most industrious, and the most 
needy class were defrauded of over ten millions of hard 
earned money to put gas into the inflation balloon 1 
This problem is easily proved. Let the President, who 
in this juncture is as powerful as the most autocratic 
ruler in the world, call before him a thousand working 


men of different trades, let him ask them whether they 
have been benefited by four per cent, on their wages, 
during the winter and spring. If they have, then by 
all means let him recall his veto and his memorandum, 
give Butler, Logan and Morton carte blanche, sign the 
conference committee bill, and use his influence to 
double the dbse of paper money. If, on the other 
hand, he finds that their wages were not increased, but 
diminished, and in some cases cut off altogether, why 
then he can see that he has only done his duty to a 
suffering people, who were swindled in four months out 
of $10,000,000, which they had to pay more for the 
necessaries life. 

I remain yours most truly, 

Adeksey Ciireosibiioy, 

Parsee Merchant of Bombay. 

New York, June 11,1874. 


Spirit of the Press. 

[N. Y. Evening Post.] 

The published correspondence between President 
Grant and Senator Jones, of Nevada, gives further proof 
that on the main question of a sound currency the Pres 
ident is on the right side. 

The desirability of the end being conceded, the only 
points of difference are as to the means to attain it. 
The President for more than five years has been taking, 
to say the least, a very roundabout way to bring our 
demand obligations up to a par value in gold ; but hav¬ 
ing finally got rid of the last exponent ot the mistaken 
theory that the Government could best pay its demand 
obligations in gold by using its surplus gold, available 
for this purpose, in order to buy up debts not due lor 
from ten to twenty years, it is fair to suppose that he 
now sees the absurdity of this theory ; that he has dis¬ 
carded it, with the two secretaries who made it their 
cardinal doctrine, and has sought for other counsels; 
and, certainly, in this search he has gone to the other 
extreme, anti has adopted the plan that the best way 
to get to a specie basis is to .repeal the act which makes 
the Treasury notes a legal tender. In theory this plan is 
defensible. In practice it would at present or within 
a year cause needless destruction. We are on the 
top of the house and wish to reach the sidewalk. One 
class of advisers recommend that the best way is to 
jump from the roof; that this is the only direct way. 
The President for the moment shares this opinion. 
The other class recommend that the descent be made 
by way of the stairs; and this is the recommendation 
which we make. Which shall it, be? 

[Philadelphia Ledger.] 

It must be said that we are not “on the top of the 
house.’’ We have been coming down to the substan¬ 
tial footing of the sidewalk for several years, and have 
made considerable progress. This is the real situation, 
and with the mere mention of it a great deal of the de¬ 
lusion excited by the fable of our New York contem¬ 
porary disappear at once But more than this, the 
classes of “advisers” who figure in the fable are totally 
changed. We no longer see that “class of advisers” 
who “recommend” that the best way to reach the,side¬ 
walk “is to jump from the roof.” But instead of the* 
we do see another “classof advisers,” who say “You are 
quite as safe on the top of the house; there is no oc¬ 
casion for you to come down ; you had better retrace 
your steps, and go up again and stay there indefinitely.” 
There are old-fashioned people who will persist in be¬ 
lieving that the “sidewalk” aflords them better footing 
to stand upon than they have ever found at“the top of 
the house,” and these will reach the firm ground with¬ 
out going up stairs to reach what is dou-r. stairs, and 
without having to camp out upon the roof for an indefi¬ 
nite time, with the risk of falling off some night, and 
thus finding themselves on the sidewalk with all their 
financial bones fractured bj r their sudden tumble. 

[Chicago Tribune.] 

General Grant’s utterances have probably received 
a peculiar and striking emphasis through the interpre¬ 
tation of Senator Jones, of Nevada, who had already 
demonstrated in his Senate speech a good head for 
practical common sense and logical finance. But it is 
sufficient if the President comprehends and approves 
the views thus put forth. He may not be able to in¬ 
duce the present Congress to adopt them ; but he is in 
a position, by the exercise of his veto, to bring the ques¬ 
tion before the people in a simple form, and thus divest 
it of the complication with which some of the com¬ 
promise Congressmen desire to befog it. The plan he 
would recommend, though he lias no confidence that 
it will be adopted by the. present Congress, is pimple 
and feasible. It is an intelligent elaboration of Horace 
Greeley’s aphorism, that the way to resume is to re 
sume. He believes in a return to a specie basis at the 
earliest practicable date, and believes that the time 
may be fixed, and a plan devised, now as well as later. 
It is not the detail but the spirit of the plan which 
should commend itself; others might be substituted if 
the spirit were retained. If it were adopted, the peo¬ 
ple would wonder in two years why it had not been 
adopted before. 

[Cincinnati Enquirer ] 

That distinguished financier, U. S. Grant, has again 
given his views upon finance—this time in a shapeless 


potent than in a veto. He is still harping on a return to 
specie payments—not much else. His allusion to a re¬ 
sort to expedients to stimulate prosperity must mean 
a contraction of the currency to the extent of about 
forty per cent, that being the expedient which has been 
adopted. He is frank enough to say that his views 
are not respected by Congress, and he is not qqite sure 
that they are respected by himself, as he, with charm¬ 
ing frankness, admits. Under conditions which are 
both impracticable and inexpedient he is in favor of 
free banking. The residential views, if adhered to 
by their author (?), will prevent the passage of any 
financial measure at this session of Congress, provided 
that the majority in Congress adhere with equal tenac¬ 
ity to the wishes of a majority of the people. 

[X. Y. Com. Adverti.-er l 

The publication of the “memorandum” of his finan¬ 
cial views by the President has been received with 
great satisfaction by the people, who are now strength¬ 
ened in the faith that no Executive sanction will be 
' given to any scheme of inflation. They are weary of 
this long journey though the wilderness. They have 
had enough of panic and speculation and financial dis¬ 
tress. They are tired of the uncertainties and con¬ 
flicts of business, and they pine for a day when assur¬ 
ance can be made sure, and when the ordinary affairs 
of life will not b 1 subjected to the capricious fluctua¬ 
tions of an irredeemable currency. The recalcitrant 
Congressmen may exhibit indignation, and threaten 
to go to the people on this issue. The only result will 
be to encourage the Democrats and to demolish them¬ 
selves. President and people are as .one in keeping 
the National promises, and returning to the real “hard 
pan” of business and industry. 

[Philadelphia Press.] 

President Grant's last statement of his views on the 
financial question is in every way most unfortunate. 
It piaces him in still more direct antagonism with all 
the more influential leaders of the Republican party. 
It marks out a line of policy which is strongly opposed 
to the industrial interests of the country and which 
would work embarrassment also to commercial inter¬ 
ests. More important than all, it aims a blow (though 
doubtless unintentionally) at the masses of the people 
—the laborers, farmers, and producers of every kind, 
a6 opposed to the capitalist class. The President 
speaks for the non-producer against the producer; for 
the happy man who makes money out of money, and 
against the man who cannot get bread out of work. His 
remedy may be wise according to the old books, but 
it will not relieve a patient in his last gasp. 

[Philadelphia Xorth American.] 

The views expressed are so broad, sweeping and de¬ 
cisive that a feeling of regret will be entertained gen¬ 
erally by his friends that he should thus have closed 
the doer against all possible attempts at compromise 
between himself and the party in Congress. The veto 
of the first bill passed was rather well received, because 
the bill itself was inharmonious and imperfect, and 
satisfied no particular interest. But the ground taken 
in the memorandum addressed to Senator Jones is far 
in advance of the positions assumed in the veto, tor the 
doctrines now promulgated comprehend the repeal of 
the legal-tender act, the suppression of all notes under 
the denomination of ten dollars, the almost immediate 
resumption of specie payments, a coin currency and 
corresponding measures. We need not say that not 
one of these propositions stands any chance of adoption 
by Congress. 

[■Washington Chronicle.] 

The substance of the President’s views is, of course, 
approved, by those who favor an early return to specie 
payments, and will be disapproved by that populous 
element of society who have been organizing under 
various names for several years last past, as “Working 
Men’s Union,” “Labor Reformers,” “Patrons of Hus¬ 
bandry,” &c. They have been steadily inculcating the 
doctrine that “greenbacks” are good enough for the 
working people, and that enough of them should be is¬ 
sued to make money easy. There are said to be a 
couple of millions or so of voters in these organizations. 
Many Representatives in Congress and some Senators 
have knowledge of this fact. These voters will be 
heard at the polls between this and next December. 
Hence no one need expect any approach towards con¬ 
traction at this season of Congress. 

[Baltimore American.] 

The Conference Committee of the House and Senate 
are endeavoring to fix up some measure that will be 
a sop to the inflationists, and yet run in safety the 
gauntlet of the Presidential veto. General Grant serves 
notice upon them that, the two extremes cannot possi¬ 
bly be reconciled. 'The resumptionists and the infla¬ 
tionists are so entirely hostile, that there can be no 
middle ground upon which they can meet. We hear 
from Washington that both parties to the financial 
question object to the communication which was pub¬ 
lished on Saturday, on the ground that if the President 
desired to instruct Congress on the subject he should 
have done so in a message; but the coflntry at large 
will welcome this declaration of his views without pay¬ 
ing attention to the smaller question of official etiquette 
involved. 


















the financial record. 


t 


59 


[Pottsville, (Penn.,) Miners Journal ] 

General Grant is now evidently pandering to wealth 
and the money changers, who it seems have more in¬ 
fluence with him than the trusted advisers and repre¬ 
sentatives of the great Republican Party; and therefore 
the only policy left for the representatives in Congress 
is to pass such a currency bill as the people desire, and 
let the President take the responsibility of vetoing said 
bill again if he chooses to do so, and they will then 
pass on his acts at the ensuing Congressional elections. 

[N. Y. Bulletin.! 

The public are profoundly indebted to the President 
for the firm stand he had taken in favor of the resump¬ 
tion of specie payments. Tne country should not and 
need not any longer bear the disgrace and the evils of 
suspension; aud General Grant has shown a statesman- 
ly courage in insisting that, so far as his power and 
prerogatives are concerned, they shall be devoted to 
the restoration of our finances to the specie basis. We 
wish it were possible to speak as approvingly of the 
method by which he proposes to reach this most desir¬ 
able consummation. On the contrary, we feel bound 
to say that, of all possible plans, he has chosen the 
most objectionable. 

[Philadelphia Bulletin.] 

The President is a hard money man ; he wants to 
bring the business of the nation back to a specie basis, 
to repeal the legal tender acts, to withdraw much of the 
currency lrom circulation, and to fix values permanent¬ 
ly bj making the gold dollar the standard. Th s is the 
docil'iue that has been advocated persistently by this 
paper and by the influent.al press of the country gen¬ 
erally, and the President has not only succeeded in ex¬ 
pressing it succinctly and with singular force, but he 
has suggested a plan for reaching the desired end, which 
seems to us to be altogether excellent. We can imag¬ 
ine that this brief paper will be gall and bitterness to 
such men as Morton and Logan and Butler and the 
other advocates of further issues of irredeemable cur¬ 
rency. 

[Burlington, (Iowa) Hawkeye.] 

The inflation Senators from Iowa have misrepresent¬ 
ed the great body of their Republican constituents and 
will not be sustained at home. 

[Chicago Times.) 

This pronunciamiento by the President will set at 
rest all doubts as to bis position. He is uncompromi¬ 
singly committed to bard money, and will approve of 
no financial scheme that does not contemplate a return 
to specie payments. It shows conclusively that the 
pending currency bill is, in the opinion of the President, 
radically wrong, and knocks the last prop from under 
the feet of the inflationists. Mr. Grant, who has ex¬ 
pressed himself very decidedly in favor of an imme¬ 
diate repeal of the legal-tender acts, seems to think 
that this alone would suffice to bring the country safe¬ 
ly and easily to resumption in a comparatively short 
time. That it would tend to hasten that desideratum, 
provided that the repudiation moDtebanks would let 
things alone, is altogether likely. 

[N. Y. Everine Mail.] 

The views of the President on the financial problem, 
expressed in his “Memorandum,” tho’they include little 
that the friends of a sound currency should not hearti 
ly approve and endorse, yet have been met, in certain 
quarters, with an unfairness of criticism that would 
justify the inference of an intentional misconception of 
his meaning. To tho.-e who read with the single ob¬ 
ject of ascertaining what the views of the President 
really are, it will present neither inconsistencies nor 
enigmas, while it will certainly baffle the purpose of 
those who desire to pervert its meaning, and thus les¬ 
sen the force with which it must appeal to the public 
judgment. 

[Philadelphia Chronicle.] 

If the “views entertained on the subject of legislation 
on finance” which the president has expressed in the 
“memorandum,” furnished to Senator Jones, are the 
views of his new secretary, the country is warmly to 
be congratulated upon Mr. Bristow’s succession. If 
they are the president's own views, it is evident that 
he has been doing a great deal of thinking on this sub¬ 
ject and has bad some very sound advice from other 
quarters than those in which he has been supposed to 
seek advice in political matters; for they show that he 
has clearly fixed in his mind some simple fundamental 
principles which his earlier expressions of opinions did 
not show that he had grasped—principles, we may add, 
which his former secretaries, Barnwell and Richardson, 
never grasped. Perhaps we may venture to say that 
he got some ideas, as we are sure a great many 
people did, from the wonderfully clear headed speech 
of Senator Jones a short time back. 

[Newark Advertiser.] 

The President’s scheme has a certain military exact¬ 
ness. a single and final objective point—the retiring of 
all the legal-tenders. His campaign plan is to declare 
that they shall cease to be legal tenders on the 1st 
of July, 1875, and that from that date all contracts 
shall be made on the specie basis. Within the fiscal 
year following and ending on the 1st of July, 1876, he 
would redeem, cancel and destroy all legal tenders pre¬ 
sented for redemption, finding the gold to do it with 
by selling gold bonds at five per cent, or less. This 
would not be a contraction of the currency. It would 


be only a redemption in precious and standard metals 
of the paper we call currency. 

[Bangor (Me) Whig.] 

In taking this position the President will be sus¬ 
tained by the honesty and intelligence of the country 
and we hope that he will maintain it with the tenacity 
of purpose which he displayed in strangling the rebel¬ 
lion. 


A Wail From Pennsylvania. 

The Philadelphia Press since the Jones veto, is “phil¬ 
osophy teaching by example,” Saturdays, Sundays 
and all, as Rosalind says. Last Sunday it held forth 
after this mournful fashion : 

It would be absurd to deny that the President has 
placed himself in antagonism to a large body of Ins 
own party. Equally futile would it be to deny that he 
has placed himself in harmony with a large body of 
the Democratic party. Not less clear is the fact that 
his position is sustained, either by open or silent ap¬ 
proval, by a majority of the newspapers. Many who 
are at heart against his proposition, refuse to say so in 
view of party or personal obligations. Perhaps he 
maybe right; perhaps, surrounded by flatterers and 
by newspapers who echo his opinions, he may carry 
the country through on the hard money basis; and if 
so, we shall be content; but, speaking for Pennsylvania, 
we believe that a persistence in this policy will inevit¬ 
ably force insolvency upon many interests that would 
be quite equal to the struggle if they were sustained 
by a liberal course on the part of their public servants 
—insolvency not the result of their own bad housekeep¬ 
ing, but simply the result of the misfortunes of others 
with whom they never had any personal connection. 

President Grant, should he fail in this extraordinary 
proceeding, will not be the first of bis class. Andrew 
Jackson succeeded when he broke down the Bank of 
the United States, because he created a system of pet 
banks and forced liberal discounts and an enlarged ex¬ 
pansion policy. His apostle and successor, Martin Van 
Buren, failed when he attempted to force the hard- 
money system of the Government upon the people. 
We admit that President Grant has larger facilities 
than either Jackson or Van Buren. We admit that he 
has the national banks, the corporations, and the news¬ 
papers at his command, but as these do not represent a 
people almost irretrievably ruined, we believe he will 
yet “call a halt” to his policy, and refuse to apply mere 
theories as a cure-all for indisputable suffering. 


Butlerism among 1 the South Sea Islanders. 

As Gen. Butler is ordered abroad by his physician, 
and has intimated that he may visit his friends in the 
Fiji Islands this summer, we hope he will call at 
Hawaii on the voyage ar.d deliver there the finan 
eial speech of which Boston was not deemed worthy. 
He will find attentive listeners, if we may believe 
the latest advices from the land of the cocoanut. A 
letter from Honolulu to the Allgemeine Zeitung, says 
that the administration is in want of funds, to carry on 
the government, and has decided to attempt to fill its 
treasury with paper money. Hitherto, coin has been 
the circulating medium. Various reductions of ex¬ 
penditures are spdken of, but the extra expenses of the 
new army, the Legislatyre, and the new officials will 
make>t more and more difficult to avoid deficits. Be¬ 
sides, the King desires to live with regal splendor, in a 
palace; although $20,000 have been expended in fur¬ 
nishing a very respectable residence, the King declares 
he has no room! The Islands are growing poorer, 
while King Ivalakana is becoming more magnificent in 
his ideas. The government wants money, and some 
means must be devised to raise it. The issue of paper 
money on no sound basis, may agree very well with 
Hawaiian ideas of finance, but will, of course, disturb 
values, and flood the Islands with “wild-cat” money. 


France and. the United States, 

The condition of things in France since the great 
war ended has been a sharp contrast to our own finan¬ 
cial management. By the last detailed statement re¬ 
ceived by mail the note circulation of the Bank of 
France was $511,000,000. On the 30th of October, 
1873, it was $602,000,000. The decrease is $91,000,000 
in twenty-seven weeks. On the other side of the ac¬ 
count, the bank held in specie on the 30th of October, 
1873, $145,000,000, and on the 7th of May, 1874, $219,- 
000,000. The increase is $74,000,000. Putting the 
two movements together, the bank may be said to be 
$165,000,000 nearer specie payments than it was six 


and a half months ago. During the same period the 
United States have added over $20,000,000 to their de¬ 
preciated paper, and are now sending the produce of 
their gold and silver mines to supply France with an 
honest currency. 

For the first three months of the current year the 
French imports have been $185,000,000, or $30,000,000 
more than for the same period in 1872. The exports 
have been $171,000,000, or $23,000,000 less than in 
1872. Here is a loss on-“cash balance” of $53,000,000 
as compared with last year. As the President most 
truly said in liis veto message, the balance of trade 
has nothing to do with the exportation of our gold. 
Commenting upon these facts the Chicago Journal 
says: 

What Congress has stupidly failed to do, the French 
Government is now doing, and that largely at the ex¬ 
pense of the United States. The senseless folly of 
trying to inflate the paper money wi en we could re¬ 
store specie payment is almost without a parallel in 
political foolishness. Our bonds are worth a trifle 
more than their face in gold. Trade is doll everywhere. 
The great bankers of the world are afraid to invest in 
railroads and similar securities. Their faith iu the 
United States is complete. They would prefer United 
States bonds to railroad bonds, commercial paper or 
idle hoards of coin. Since October last our exports 
have exceeded our imports about $20,000,000, and the 
balance of trade in our favor might have been made 
helpful in securing resumption; but, instead of that, it 
is working against us all the time. France is deriving 
the entire benefits of the stagnation in commerce and 
the timidity of bankers in buying the paper of private 
corporations. 

Upon this same subject the Chicago Post, says : 

While the Bank of France is increasing its gold re¬ 
serve by drafts upon the hoarded coin resources of the 
Bank of England and similar moneyed institutions 
upon the Continent, the latter are turning to the Uni¬ 
ted States for the specie to make good their deficits. 
Late'y the course of exchange has favored exportation, 
and the result has been constant shipments of specie 
from New York. This country is but tolerably pre¬ 
pared to stand the loss of coin, and the fact is manifest¬ 
ed by the appreciation in the premium on gold. The 
gold account with foreign nations last year left a bal¬ 
ance of $10,000,000 to the credit of the United States; 
and the late Treasury and New York bank reports 
show an unusual increase of specie. On the other-hand, 
the yield of the California gold mines shows a constant 
falling off, while the amount of specie brought to this 
country by immigrants will not probably show an in¬ 
crease. It is also stated that United States bonds are 
suffering a temporary decline in popularity abroad, 
which will result in the shipment of gold to settle bal¬ 
ances ordinarily paid in bonds. 


A Letter from St. Louis. 

St. Louis, Mo., May, 1874. 

To the Editor of the Financial Record. —Hav¬ 
ing been for some time a reader of the Record, I can¬ 
not resist the temptation to express to you my hearty 
approval of the work you are doing in forming public 
opinion on the great question, whether we shall have 
an honest currency. I regard this question as the ques¬ 
tion of the day. It must be settled before any other 
question about “reform” can be even so much as profit¬ 
ably discussed. All talk about “reform”—even the 
preaching of the gospel, sounds hollow and empty to 
me as loDg as the national conscience is debauched by 
paper money. Right here I venture to suggest that 
perhaps the advocates of honest money do not pre¬ 
sent the moral aspects of this question as plainly as 
they might to the clergy of the country. I see no rea¬ 
son why the infamy of broken promises and wholesale 
lying by the government, and of compelling the use of 
a false standard of value, thus rendering honest deal¬ 
ing simply impossible, should not be denounced from 
every pulpit in the country. 

I assure you that the West is not wholly given over 
to the infamy of inflation. Our people need only to 
have the question stripped of the fallacies with which 
it is beclouded, and presented in the clear light of rea¬ 
son and common sense, and they will ultimately be 
found on the right side. 

Your Association would do well to get out a cheap 
edition of Sumner’s History of American Currency 
for popular circulation. Bastiat’s Essays on Political 
Economy, recently published by the Putnams, also de- 
cerves a wide reading. a. f. h. 





























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FINANCIAL RECORD. 

“WE NEED ONE THING BESIDES MORE MONET, AND THAT IS BETTER MONEY .”—Senator Each. Chandler. 

VOL- L FRIDAY, JUNE 19, 1874. NO. 20 . 


The Financial Record will be continued until further no¬ 
tice and will be sent free of postage, to all persons who will re¬ 
mit 50 cents to the publishers. All editors who receive it are 
invited to send their papers in exchange. Jt will be no longer 
published by the American Social Science Association, 
but for the present, as heretofore, communications respecting it 
may be addressed to the Secretary of the Association, F. B. San¬ 
born, No. 5 Pemberton Square, (Room 21,) Boston; and all ex¬ 
change papers, public documents,etc., maybe forwarded to the 
same address. 


The Spirit of Congress. 

It is our painful duty to announce the decease of the 
compromise currency bill in the hall of the House of 
Representatives last Saturday. It was not a promising 
child. It was a favorite with nobody; still, many of 
our national legislators were moved with pity by its 
forlorn situation and their own, and tried to keep the 
breath of life in it. But circumstances were against it; 
it had more enemies than friends; and when the Sena¬ 
tors refused to kill the infant the representatives did 
the business, and the poor compromise baby gave up 
the ghost soon after noon on Saturday. 

Senator Morton had called up the bill on Thursday, 
and explained the conference committee’s report at 
length. Mr. Sherman defended the compromise, but 
was obliged to submit to sharp questioning by Messrs. 
Edmunds and Boutwell, who pointed out its defects. 
The opponents of the bill then took their turn. Mr. 
Buckingham said he could not see that it led to expansion 
or to specie payments, but he was against it because ‘‘it 
postpones the day (of specie payments) about as much 
and about as far as from the present hour to the be¬ 
ginning of 1878.” Mr. Flanagan made a funny speech 
in opposition, and after speeches by Messrs. Morrill 
(Yt.) and Frelinghuysen, Mr. Jones put in a neat little 
argument which riddled the bill through and through. 

The other side was then heard. Mr. Harvey spoke 
briefly and was followed by Mr. Logan, who contended 
that increasing the volume of greenbacks would depre¬ 
ciate the price of bonds. “Why? A bond to-day is 
worth $115 in greenbacks. If the greenback goes up 
to gold, that excess is stricken off, and your bond is 
worth only the same in gold that it is in greenbacks. 
The very moment you put greenbacks up to gold, of 
course your bonds are brought to that standard!” 
Again, “if the legal tenders should all be redeemed 
and burned up you reduce to that extent by $382,000,- 
000 of values the property of the people of the United 
States. That is exactly the result.” The Senators 
were too polite to laugh at this, but Mr. Jones demol¬ 
ished the latter argument by asking yrhether a man 
destroys any value when he puts a note he has paid into 
the fire. 

The debate was resumed on Friday, and long speech¬ 
es were made by Mr. Sargent and Mr. Stewart in op¬ 
position. It was in interrupting the latter that Mr. 
Sprague made his only speech of this session on the 
currency question. As it was not long we quote it en- 
. tire. “ Gold is the basis of monopoly !” Mr. Morrill 
of Maine took the ground that while a large part of 
the people may demand more irredeemable paper, they 
do not need it. After an apology from Mr. Howe for 
voting for a bill that is inconsistent with all the speeches 
he has made on this subject, the report of the commit¬ 
tee was agreed to by 32 to 23. Senators Gilbert, Howe, 
Sherman, and Scott voted with the inflationists, while 
Mr. Alcorn, an inflationist, voted against the bill. 

On Saturday Mr. Maynard called up and explained 
the report in the House. Mr. Clymer, who refused to 
sign the agreement, alone made a speech against the 
compromise and the vote was speedily taken. It re¬ 
sulted ayes 108, noes 146. So the report was rejected. 
The affirmative was made up almost entirely of moder¬ 
ate inflationists, but a few such members as Burcliard, 
Garfield, and Scofield, who have heretofore voted 
against any inflation, also supported the compromise. 


The negative was made up of three classes: Demo¬ 
crats, hard-money Republicans, and the most ultra in¬ 
flationists. The bill did not receive one vote from New 
England, and very few from the Middle States. 

After this the House voted by a large majority to ask 
for another conference, and Messrs. Dawes, McCrary 
and Marshall were appointed on the committee. The 
matter was then sent back to the Senate, where there 
was a long debate. Mr. Edmunds and others opposed 
another conference as entirely useless, while Mr. Sher¬ 
man and others, while agreeing that there was little 
prospect that a better measure could be framed, yet 
argued that it was only ordinary courtesy to the House. 
This view prevailed, and Messrs. Wright, Ferry of 
Michigan, and Stevenson were appointed on the com¬ 
mittee. The House members of the committee are one 
inflationist and two hard-money men, the Senate mem¬ 
bers are two inflationists and one hard-money man. 
An agreement on any important legislation from such a 
committee is hopeless. 


The Dead Compromise. 

Debate Between Senators Jones, Logan, Thur¬ 
man, Buckingham, etc. 

[In the U. S. Senate, June 11, 1874.] 

Mr. Jones. Mr. President, I do not intend to say 
more than a few words on the report now pending be¬ 
fore this body. It seems to me that it bristles all over 
with objectional features ; and I do not share with the 
Senator from Ohio his confidence that the legislation 
may not be changed before the 1st of January, 1878, 
so as to entirely annul the redemption features of the 
pending bill. I do know one thiog, that the inflation 
is immediate, that the redemption is very remote. Sir, 
I do not believe that it is to the advantage of any class 
in this country that the price of the greenbacks shall 
be elevated by any such method as is proposed in this 
bill. Gentlemen talk about the resumption of specie 
payments. It is utterly impossible to resume specie 
payments and keep that resumption permanent with 
the great volume of paper currency now afloat. Specie 
will not remain with us as long as the price of every¬ 
thing that is produced, as long as the.price of eveiy- 
thing that we manufacture and of everything we raise 
here is so much higher than the prices of the same com¬ 
modities and the same materials in every other portion 
of the world. You may make your greenbacks redeem¬ 
able in bonds, and then again issue the greenbacks, 
but it will be all in vain. When an inflated currency 
is in a country, when prices have risen in proportion to 
that expansion, contraction is the only remedy for it, 
and specie payment can never be maintained without 
a contraction of that currency. 

Sir, all the evils that have been complained of here¬ 
tofore with regard to this irredeemable currency that 
we have will be just as active when you shall make the 
greenbacks convertible into bonds as they are to-day. 
It makes very little difference whether gold rates at 
$1.12 or $1.03 so long as your paper is not immediately 
convertible into gold ; all the grievances we complain 
of, all the hardships upon the workers of this country 
upon the constant fluctuation that is robbing them day 
by day of the fruits of their labor, will be just as active 
as ever. This bill will have the effect to raise by a 
small percentage the value of the greenback. It will 
have the effect also to degrade the bonds of the United 
States to a small extent. In any event it can never 
bring back specie payments, because the greenback 
will bear no just relation to prices here except to the 
price of bonds. The bonds again will have to be 
negotiated abroad perhaps for gold. There will be no 
gold among the people of the country, the greenback 
will not be convertible into gold, and all the fluctua¬ 
tions that we have complained of heretofore,aggravated 
perhaps by the increased volume of paper money, will 
be felt after this redemption shall have taken place. 

In the next place, what will be the proposition to get 
back to specie payments after the 1st of January, 1878? 
How can it be done? Admitting that gold will not 
remain in the country when the price of everything is 
at so high a point as to drive it out, when the problem 
will be presented to this body and to the country, how 
can we get an unvarying standard of value? how can 
we return to and maintain specie payments ? Every 
body will see then that it must be by contraction. That 


contraction, with prices raised as this additional volume 
of currency which this bill contemplates will cause 
them to rise, will make the revulsion ten times great¬ 
er than it would be to return to specie payments to-day. 
Between this and the 1st of January, 1878, the country 
will have suffered a great deal more than it would suf¬ 
fer by returning to specie payments within a year or 
within six months. You inflate money that can neith¬ 
er be hoarded nor exported, and you leave the largely 
increased volume of currency to float the property of 
the country and to effect its exchanges. Of course, 
property must rise, and we shall be further off on the 
1st day of January, 1878, than ever. It seems to me 
that the bill travels in a circle. 

It seems to me it takes all the gold we have in the 
Treasury to pay our current expenses. I see no pro¬ 
vision here made for the hoarding of gold needed to 
purchase bonds in lieu of the greenbacks which shall 
be reissued after bonds shall have been exchanged for 
them. And what will be done ? Suppose that the ex¬ 
igencies of the country require that the greenbacks re¬ 
ceived for bonds shall be reissued, and in accordance 
with the provisions of this bill they are used for the 
current expenditures and there is no gold in the Treas¬ 
ury; there is no proposition here to accumulate gold, 
and there may be none in the Treasury at that time to 
meet this provision of the bill. So I say, Mr. President, 
without entering into a detailed statement of the many 
objectionable features of this bill, that 1 believe, first, 
that after this bond redemption shall have taken place 
the country will be as far from specie payments as it 
was before. I believe that not only will it be as far 
from specie payments, but that it will be much more 
difficult to resume specie payments after such redemp¬ 
tion than it would be to-day. I believe that the debt¬ 
or class will be as clamorous then as they are now in 
the presence of redemption. The only way, it seems 
to me, to restore this country to prosperity is to restore 
the standard that the world uses to measure values. 
The only way we can export products from this coun¬ 
try and enjoy foreign trade is to make the prices of 
commodities in this country bear some reasonable rela¬ 
tion to the prices throughout the world. Instead of 
raising the value of greenbacks by arbitrary measures 
like this, the easiest and the most sensible measure is to 
reduce the volume of the greenbacks so that their val¬ 
ue shall approximate to the price of gold and at the 
same time reduce the inflated prices now ruling, so that 
we shall be able to deal with the rest of the world with¬ 
out dealing at disadvantage, as we are now doing. Do 
what we will, the country is still operating upon a gold 
basis. The greenback manifestly rests upon the gold 
to-day. The average hope and confidence of the peo¬ 
ple that it will be ultimately redeemed measures the 
value of the greenback to-day ; but instead of return¬ 
ing to specie payments, which I believe it is easy to do 
within two years without any great danger to any in¬ 
terest, we are using this sharp cimeter—gold—to cut 
our bargains. But we have wound paper all around 
its edges, so that we hack and cut, and every time a 
bargain is divided some other people get the greater 
half in the division. 

We should be on the road to prosperity, if instead of 
this bill it were possible that the present volume of 
greenbacks and bankbills could be left afloat until the 
year 1878 or 1877 or any other time that this body could 
agree upon, and if the legal-tender clause could be re¬ 
pealed and people should commence to think correctly 
on this subject, and should remember day by day when 
they see the quotations in the commercial and finan¬ 
cial markets that gold is $1.12 one day and $1.08 an¬ 
other, that it means simply that greenbacks have been 
fluctuating, and that it is a solecism, that it is doing vi¬ 
olence to the language to say that the par of the world 
is above par, or that the par of the world, which is gold, 
is below par. We should accustom ourselves to saying 
what is the truth, that paper is above or below par, as 
the case may be. Then it would be well if people 
would make their bargains payable in gold or on the 
basis of gold, and then pay in the paper of the country 
just what that paper will bring in the market, for it is 
worth no more nor less by the legal-tender clause being 
added to it. I do not think that the legal-tender clause 
added to it makes it worth 1 per cent, more than it 
would be worth without it, even though you make no 
proposition for the redemption of the greenbacks. But 
let all contracts and debts now outstanding, before such 
plan be agreed on, be paid in greenbacks. I would get 
the people accustomed to make their bargains in gold, 
and by having it so that it could pay debts contracted 
you would find that gold would flow into the country 
and that prices would come down to where they really 
belong. 
































62 


THE FINANCIAL RECORD. 


I am opposed to any proposition, come in whatever 
form it may, that attempts to override what God him¬ 
self has made for money, that attempts to make money 
a commodity and to make commodities money. I 
believe there is a vast and wide difference between 
the functions of the two, and that any departure from 
this plain truth will punish the country that so de¬ 
parts. I believe the sooner we come down to a 
purely gold standard the better it will be for the 
country. I believe that when we do so come down 
we shall have entered upon an era of prosperity which 
will be unbroken for a century. I believe that we 
shall enter upon an era of prosperity that in a very 
few years will make this God-favored land the clear¬ 
ing-house for all the world. Standing as we do half¬ 
way between Asia and Europe, the exchanges of 
the world will he effected in our markets. But as long 
as we use the present irredeemable, inflated, redun¬ 
dant currency, we drive the world’s instrument of 
commerce—gold-—from our midst, and it will be found 
impossible for us to compete successfully with any 
other nation for the world’s commerce. 

Mr. Logan. When we are fold that this measure 
runs in a circle, and that it is not a measure that is 
agreeable to those who advocate specie payment, I 
witness the fact that to many it is not agreeable, and 
while I witness that fact I stand amazed and surprised 
at the arguments made here against the measure by 
the very men who persistently voted for this portion 
of it before. The very principle adopted by the chair¬ 
man of the Finance Committee, and votedfor by every 
Senator who has advocated specie payments on this 
floor, is the same principle contained in this report to¬ 
day ; but to-day we find it denounced, and why ? Be¬ 
cause it will prove destructive to the great interests of 
this country. How is it that they have so readily and 
so recently ascertained the fact that it will prove de¬ 
structive to the interests of the country, when many so 
recently advocated it as the only palliation for the 
great difficulties in the finances of the country at this 
time and as the proper 6tep in the direction of specie 
payments which all desire so much ? Now, sir, I wish 
to say to Senators on this floor who have been in the 
habit of denouncing Senators who have advocated dif¬ 
ferent measures that have been before Congress as 
“inflationists” and as Senators who desired to demone¬ 
tize sdver and gold and as opposed to specie payments, 
I want to say to them now once for all that I know no 
man in the Senate Chamber who has ever opposed spe¬ 
cie payments. The only thing we have said or argued 
was that we could not hurriedly undertake to adopt a 
return to specie payments, because the specie dia not 
exist in the country for the redemption of our prom¬ 
ises to pay, and the tenor of the arguments has been, 
however unfortunate the expression of the idea may 
have been, that the country should come to specie pay¬ 
ment gradually, and that when the time should corns 
nobody would oppose it. 

Then comes our favored Senator from the gold min¬ 
ing region, [Mr Jones,] always pleasant and humor¬ 
ous, kind and good-natured ; feeling as though there 
was nothing that the earth should give forth except 
the yellow-tinted coin that it might jingle in the pock¬ 
ets of the many. He finds nothing that Moses admires, 
but is willing that some Aaron should be leader in this 
great land of ours and make it bow down to the golden 
calf and become its worshiper. Sir, the people of this 
country do not worship gold, they worship their God, 
but they do use gold as a medium of exchange. I 
desire to answer one remark of my friend from Nevada. 
He says the only road to specie payment is contraction. 
Mr. President, I will say there is no doubt of one thing. 
You certainly can contract to specie payments ; there 
is no question about that. If there were $100,000,000 
of gold in this country, and you contract the currency 
of the country down to $100,000,000, then of course 
you have specie payments, because you have enough 
specie to redeem the $100,000,000. If that is what the 
Senator means, I certainly agree with him that such 
contraction would bring specie payment and ruin also. 
I should like to know what the Senator does mean 
when he says the only remedy is contraction. If contrac¬ 
tion is the only remedy, you have to contract down until 
the faith of the country and the gold unite, and until 
it bloats your money in the country without any per¬ 
son asking. “Does the redeemer ot this money live 1” 
It is only in that way. There must be gold enough in 
the country or silver or whatever the redemption may 
be in, with the faith of the people based on the ability 
of the Government to redeem the amount of the mon¬ 
ey it has, before you have gold redemption in that 
way. 

Mr. Jones. I mean by contraction that whenever 
you shall have reduced the volume of what you call 
money to that amount which would circulate in the 
country if the currency were purely metallic, prices 
throughout the country will also shrink at the same 
time, and gold from all parts of the earth will flow in 
to buy your commodities, and we shall have plenty of 
money throughout the country when that sort of con¬ 
traction takes place, and specie payments cannot be 
maintained without it. 

Mr. Logan. That is a very nice theory; but I am 


going on the theory that we have got to have the money 
to redeem ourselves, because we are the ones who are 
bound to redeem the United States notes ; we must rely 
on ourselves. If we contract the currency and contract 
the prices of your commodities at the same time down 
to such a low point that there is a great profit in pur¬ 
chasing them, of course the people will bring gold and 
silver to buy them. If you shrink the price of corn 
down to ten cents per bushel, everybody would run to 
buy corn to speculate on ; but I do not think the farmer 
would make much profit by that. If you contracted 
wheat down to twenty-five cents a bushel, the same re¬ 
sult would follow. But who profits by it ? The man 
with the gold profits by it, and the farmer is the man 
who becomes wrecked in his property and in his inter¬ 
ests. 

My friend from Nevada would profit hugely under 
a contraction of that kind, because he has gold un¬ 
counted and untold, and if the price of commodities 
were reduced until a penny would purchase the amount 
that five pennies buy now, instead of being worth ten 
he would be worth his fifty millions. That is the dif¬ 
ference, the opulent would increase their riches, the 
impoverishment of thousands of unfortunate persons 
would be produced, although having the same light of 
heaven shining on them and the same desire for pros¬ 
perity that my friend from Nevada has. I presume 
the Senator means that the only way to come to specie 
payment is to repeal the legal-tender act and burn up 
the greenbacks. Is that the idea ? 

Mr. Jones nodded assent. 

Mr. Logan. Exactly. So my friend from Nevada 
thinks that the only way is to repeal the legal-tender 
act and burn up the greenbacks. There is the propo¬ 
sition, and right there I enter issue with my friend from 
Nevada. If you repeal the legal-tender law, by that 
act you repeal the contract which is written on the 
back of the bill that it shall be received for all dues in 
this country save duties on imports and interest on the 
public debt. It is payable and receivable for all debts 
and all dues except interest on the public debt and du¬ 
ties on imports, and that is stamped upon the bill it¬ 
self. It is a contract between the people and the Gov¬ 
ernment that these bills shall be a legal tender for all 
debts and all dues save and except only the interest on 
the public debt and duties on imports. There is a con 
tract made between the Government and bill-holder. 
Now I want you or any other Senator to tell me with 
what kind of face you can say before this country that 
men who would vote to legalize $40,000,000 of green¬ 
backs that the law authorizes and has authorized, will 
repudiate the bonded debt when it does not affect 
bonds, and will turn around and repeal the law which 
exists as a contract between the Government and the 
bill-holder that it shall be receivable for all debts and 
dues. 

Mr. Jones. Will the Senator allow me a word 1 

Mr. Logan. Certainly. 

Mr. Jone9. Of course the greenbacks would be 
burned up only after the Government had redeemed 
them. 

Mr. Logan. Certainly. 

Mr. Jones. And I would never repeal the legal-ten¬ 
der act so far as obligations now in existence are con¬ 
cerned, and therefore it could not affect the contract 
the Senator refers to at all. 

Mr. Logan. But if you repeal the legal-tender act 
and then burn up the whole amount of the issue, what 
difference does it make to the debtor ? You do not inter¬ 
fere with prior contracts, but you burn the money, and 
he must pay in gold the same as it the contract was made 
subject to repeal. When you tell me that you will re¬ 
peal the legal-tender act and burn up the legal-tender 
notes, I tell you you will burn up $382 000,000 of val¬ 
ues in this country, and you reduce to that extent by 
$382,000,000 of values the property of the people of the 
United States of America. That is exactly the result. 
My own judgment is that the legal-tender notes should 
not be destroyed. 

Mr. Jones. When a man buys his own property, is 
there anything to prevent his burring up his own pro¬ 
perty. Suppose he puts his note that he has paid into 
a stove and destroys it, is any value destroyed ? 

Mr. Logan. I understand that a man can burn up 
his own note and nobody objects to it; but if he burns 
his own house, is guilty of arson the same as if he burns 
his neighbor’s house. There is no object in this burn¬ 
ing up of legal-tenders. You say you want to return to 
specie payments; you say the way to return to specie 
payments, or you have said so, at least, is to take a 
step in that direction. Now we have tendered to you a 
proposition that is a step in the direction of specie pay¬ 
ments, and in fact declares in favor of specie payments, 
and when you record yourselves against it, I tell you 
the tables are turned, and we shall see who are for spe¬ 
cie payments and who are notin the legitimate and pro¬ 
per way, and in a way by which we would arrive at it 
instead of jumping clear off the roof of the house into 
the cellar. One grand S3am Patch leap is the way my 
friend from Nevada wishes to return to specie payment; 
he wishes to repeal the legal-tender act, to take effect 
one year from now ; then he wants to redeem the bal¬ 
ance of the greenbacks the year after, and burn them up. 


Then I presume he wants a law passed declaring that no 
bill shall circulate of a less denomination than ten dol¬ 
lars, and in that way to have no currency in the coun¬ 
try at all except that which comes from some of the 
gold mines that he or some other good friend owns. 

Mr. Jones. 1 beg pardon, I have made no such 
statement here. 

Mr. Logan. The Senator has not stated it on the 
floor to-day, but I hope he will not deny that that is his 
favorite proposition. The statement has been made to 
the country over his own signature that he endorsed 
such a proposition, not to let the people of this country 
have anything less than a ten dollar bill, and if they 
cannot get it, let them go without money. No, sir ; 
the poor boy who goes to buy his loaf cf bread must 
have the penny in his pocket; he cannot have anything 
of a paper character to purchase it. If a poor woman 
wants to buy five dollars’ worth of goods of any kind, 
she must have the gold or the silver from the Nevada 
mines. We cannot afford to let her have a five-dollar 
bill. It is contrary to the theory of our wealthy friend, 
who deals in gold and silver alone. You talk about 
repealing the legal-tender act, about burning up $382,- 
000,000 of legal-tenders and then depriving the people 
of this country of having any money less than a ten- 
dollar-bill. 

Now, Mr. President, I am anxious, as I said, for this 
bill to be agreed to because it settles this question. If 
it is not agreed to, the whole question is then left open. 

Mr. Thurman. Will my friend allow me to ask a 
question ? 

Mr. Logan. Certainly. 

Mr. Thurman. He says, if I understand him, that 
if this bill be passed it will settle this question. What 
question does he mean when he says it will settle this 
question ? 

Mr. Logan. I will explain what I mean. I mean 
it settles this financial question. 

Mr. Thurman. The question of what kind of cur¬ 
rency we shall have ? Is that the idea of the Senator? 

Mr. Logan. We would have the same kind of cur¬ 
rency that we have now. 

Mr. Thurman. That it will settle that, so that 
there will be no question about the currency then to be 
disposed of? 

Mr. Logan. No power on earth can settle this mat¬ 
ter so that there will be no question left open at all 
about the currency. I do not mean that; nobody 
would expect such a thing. I mean it settles this 
question that we have been debating here in the Senate, 
that we of the Republican side have disagreed upon, 
and that you on the Democratic side have disagreed 
upon. 

Mr. Thurman. Does it do that? 

Mr. Logan. I think it does. 

Mr. Thurman. Will the Senator allow me to read 
a few resolutions adopted by the grangers in his State 
yesterday ? 

Mr. Logan. I have read them and know w r hat they 
are. 

Mr. Thurman. I think my friend after reading 
these resolutions will come to the conclusion that not 
one of those hard-fisted farmers for whom he spoke 
would vote for this bill. 

Mr. Logan. Very well; those hard-fisted farmers 
the Senator speaks of have departed quite as far from 
his platform in those resolutions ; so he can take noth¬ 
ing by that move. He hasnothiug to expect from that 
source on the platform on which he has been standing 
all winter. So far as those resolutions are concerned, 
they cut no figure in tnis debate. I am speaking about 
the question before this Congress. I do not suppose 
any question, whether of finance or anything else, could 
be settled so as to suit every man in the country, or 
every party in the country, or every community of the 
country. I expect no such thing; but this bill will set¬ 
tle this question so far as this Congress is concerned and 
so far as this discussion is concerned. 

Mr. Thurman. May I ask, does it settle it with the 
Senator himself so that he will go back to his State and 
oppose the platform of the grangers’ convention ? 

Mr. Logan. “Sufficient unto the day’’- 

Mr. Thurman. “Is the evil thereof.” 

Mr. Logan. Yes, [Laughter.] I tell the Senator 
whenever I go on the stump I am about as independent 
a man as he is, and I take my own course. I do not 
propose to say what is settled with me or what is set¬ 
tled with anybody else. I say this bill, if passed, set¬ 
tles this vexed question here in Congress ; and that is 
all we are trying to settle. So far as grangers are con¬ 
cerned and republicans are concerned and democrats 
are concerned, my friend from Ohio can settle his dif¬ 
ficulty with them himself and need not call upon me. 

L will try to settle my own. 

Mr. Thurman. Mr. President, I hope my friend 
from Illinois did not conceive the idea that the question 
I put to him manifested any want of respect either for 
him personally or for his judgment. But when he said 
the passage of this bill would settle this question, I was 
anxious to know what question he meant. If he sim¬ 
ply meant that it would settle the question what shall 
the Congress of the Uuited States do at this present 
session, then I grant that the passage of the bill would 












THE FINANCIAL RECORD. 


63 


settle that, for after the passage of the bill nothing 
more would be done on this subject at this session. But 
if that were all that the bid were to effect it would be 
a very small matter, and I conceived therefore that he 
meant it would settle this vexed question of the cur¬ 
rency not only in this Congress but with the people of 
the United States. If the bdl would have that effect, 
if it would have the effect to cause people to stop talk¬ 
ing about what kind of money they will have and go to 
work and earn money, it would be a very powerful re¬ 
commendation of this measure. 

But will this bill, if you pass it, have that effect? 
Will it stop discussion on the currency question ? Will 
it bring all the people to one mind ? I fancy it will 
have no such effect, and the reason is very plain. 
There are in this country a set of men, and events show 
that they are growing very fast, who insist that the 
precious metals shall be demonetized, that the gold 
and silver basis, as it has been called, shall be utterly 
abolished, that gold and silver shall be a mere article 
of commerce, and that the currency of the country 
shall consist in paper alone. That being the case, what 
is to be that paper currency ? Here is a division of 
opinion. One set say it ought to consist of bank paper 
and bank paper alone. The other set say it ought to 
consist of Government obligations alone, greenbacks 
alone. There is where they split. 

Now, which side is likely to be the stronger on that 
question ? Which side, at least, is likely to produce the 
most excitement on that question ? We have heard the 
Senator from Illinois to-day speak about this bank mo¬ 
nopoly, and he said very truly that it was not the less a 
monopoly because it might be in the hands of two thou¬ 
sand men. It is a monopoly if its benefits are confined 
to those who alone have the pecuniary means to avail 
themselves of the benefit of the law. Therefore that 
argument will not be diminished against monopoly and 
against the existence of the national banks, or at least 
their function of issuing paper money, which is the only 
fuuction they have that is not possessed by every one 
in this community—every private banker can do every¬ 
thing that the national bank can do except issue his 
promisory notes. This cry against them of monopoly 
instead of ceasing by the passage of this bill which looks 
to making bank paper the only paper currency in the 
country, will be increased perhaps tenfold. The con¬ 
sequence will be that the other school of currency men, 
those who insist that the only paper currency shall be 
Government currency based on the credit of the Gov¬ 
ernment, will insist on that, make their platforms on 
that, nominate their candidates on those platforms, and 
go to the country for a decision. There is no avoiding it. 

The real question that this country has to settle, and 
that it may take some years to settle, that cannot be 
avoided by any legislation we may adopt here, is the 
question whether or not you will demonetize the pre¬ 
cious metals aad have a wholly irredeemable paper cur¬ 
rency in all time to come, or whether you will have that 
currency of specie or specie-paying paper which the ex 
perience of all commercial nations for hundreds of 
years has said is the only safe currency for the country. 
I was rejoiced to hear my friend from Illinois say that 
there was no man on the floor of the Senate who was 
not in favor of a resumption of specie payments. I am 
glad to hear that; but that will be strange news to a 
great many people in Illinois. It will be very strange 
news to the three thousand grangers who assembled in 
convention at Indianapolis in Indiana yesterday, and 
who passed this resolution, as reported in the papers: 

‘‘They declare the gold basis fallacy should be abandoned, 
call for an unlimited issue of Government currency, and the 
withdrawal of all bank and local currency.” 

That is the resolution of three thousand grangers in 
convetion assembled in Indiana who passed other reso- 
utions and nominated a State ticket. How was it in 
the Senator’s own State? Their platform “demands 
the repeal of the national-bank law, and favors the is¬ 
sue of Government notes, interchangeable for bonds 
bearing a low rate of interest.” That is the platform 
upon which they go. It is what is familiarly called the 
Kelley bill—a currency which is never to be paid, but 
is simply to be interchangeable for bonds of the United 
States at a lower rate of interest, under the idea that 
by such a currency you may reduce the rate of interest 
to as low a figure as you please. The bill to which I 
allude I believe makes the rate of interest 3.65 per 
cent.; but with equal logic it might be 1-4 of 1 per cent. 
The logic uf it would be that you may by making a 
bond convertible into currency and the currency recon¬ 
vertible into a bond fix the rate of interest in a 
commercial country simply by fixing the rate of inter¬ 
est that the bond shall bear ; for if a man has a bond, 
all he has to do is go and get the greenbacks for the 
bond, paying 1-4 per cent, interest only. All he has got 
to do is to turn it into greenbacks, and his money costs 
him but 1-4 of 1 per cent. So that the logic of it is that 
it is in the power of legislation absolutely, by means of 
this convertible bond, to fix the rate of interest just as 
low as you please. That is the favorite idea with a 
large and growing party in this country, that you are 
to have that wholly irredeemable currency, except re¬ 
demption in the bonds of the United States, which sig¬ 
nifies a perpetual debt of the United States. That is 


the favorite idea with them, and the passage of this 
bill, instead of satisfying them, will only put a measure 
upon your statute book which they will antagonize and 
oppose with all their might and strength, and sooner or 
later you will find that ttie only safety is to go back to 
those sound principles which have the indorsement of 
the experience of the world for more than three centu¬ 
ries, and which have the approbation of every sound 
and clear-headed writer on this subject that ever took 
a pen in hand. 

The passage of this bill will not therefore settle this 
question at all. On the contrary, this bill will be look¬ 
ed upon as pledging the Government to perpetuate this 
bank monopoly, as it is called. It will be looked upon as 
a bill antagonistic to everything but the interests of the 
banks. It. will be looked upon as a bill which pledges 
itself to maintain and perpetuate the national-bank 
system ; and instead of giving peace to the country, it 
will only be a fresh brand thrown into the fire to in¬ 
crease the conflagration that already exists. 

Mr, Buckingham. Mr. President, I understand 
from the Senators who have spoken on this question 
that this report is a concession, a compromise; that is, 
that men who have opposite views with regard to the 
course which the Government ought to pursue with 
reference to the currency have conceded their extreme 
views and harmonized in this measure. It appears to 
me to be a concession of every financial principal which 
has been advocated on this floor which can be of any 
value. Here are men in favor of a resumption of spe¬ 
cie payments and they have been in earnest, present¬ 
ing their views with a great deal of force, and here 
comes in a report which says in regard to that measure 
that it may be delayed until 1878, and when that time 
arrives the Government shall or not, at its pleasure, re¬ 
deem its currency in coin. Here is a concession—not 
that we will demand specie payments to-day, not that 
we will demand it in 1875 or 1876, but in 1878 if it shall 
be perfectly convenient for the Government to pay, not 
otherwise. Here is also a concession on the part of 
those "who are in favor of inflation or free banking 
equally wonderful to me. What is conceded here? 
The bill provides for free banking. It opens the door 
perfectly free and wide enough for people to enter in 
and engage in the business of banking. Whosoever 
will may do so ; but be it known to every Senator that 
there can be no organization of men to establish a bank 
unless there shall be in connection with it a reasonable 
prospect of remuneration. Now, upon what terms can 
men enter iuto this business with a reasonable prospect 
of profit? If I go into the market to-day and buy you 
bonds, I must give $1.12 or $1.15 for each dollar; but 
it has been proved here repeatedly that the profit to 
men engaged in banking, on the currency which they 
receive, is only from 11-2 to 2 per cent, per annum. That 
having been asserted and proved so repeatedly upon 
this floor, I shall regard it as an established fact. But 
here you provide that men may go into market and 
buy their bonds and pay $1.12 or $1.15 for them, and 
at the end of three years and a half those bonds are to 
beat par. Now,suppose by obtaining currency and 
engaging in this business, you can make the highest 
amount of profit which has been proven, which would 
be 2 per cent, per annum, in the three and a half years 
you will have made 7 per cent, but you will have lost 
on your bonds ano her 7 per cent. This is the conces 
sion, the compromise which this report suggests has 
been made ! I challenge any business man, I challenge 
any man who knows anything about dollars and cents, to 
engage in free banking under this bill with the prospect 
of making money, unless he shall be convinced that the 
Congress of the United States will not be true to its 
promises. 

I believe that the Government is as well able to ex¬ 
change bonds bearing interest for the greenbacks to-day 
or on the 1st of July or the 1st of January next, as it 
will be on the 1st of July or the 1st of January, 1878; 
and I can see no injustice in it. 

There is another point in this report to which I will 
briefly refer. Our banking law now provides such a 
system of redemption that bank-notes and legal-tender 
notes are of equal value in all parts of the country. 
We have never had such a system before, and in that 
respect we have never had a system so valuable ; and 
in saying this I do not mean to say that the redemption 
to-day is of any special value. I do not appreciate per¬ 
haps as I should the great advantage of exchanging a 
bank-note for a legal-tender note; but I do appreciate 
the present system of redemption which, if we adhere 
to it, will, when we come to a specie basis, place the 
mercantile and the commercial interests of this country 
in regard to exchanges on a higher plane than they 
have ever stood before. But what does this report 
propose ? It proposes that the banks shall redeem at 
their counters, and there shall be no other system of 
redemption except with the sub-treasury. Therefore 
this system of central redemption, where every bank¬ 
note can be redeemed with whatever you promise to 
redeem it with and can be of equal value, the moment 
you put this bill into operation and come to a specie 
basis, that moment you depreciate the value of a bank¬ 
note in proportion to its distance from its center or from 
the bank. 


Let me illustrate this if I can. To-day a note issued 
by a bank in the city of Washington is just as good in 
the city of Samt Louis as a note issued by abanK there; 
but if you break up this present system of redemption 
and require that that note shall be redeemed only at its 
own counter or in the city of New York, you depreciate 
the value of that note in the city of Saint Louis; you 
impose a tax upon the mercantile community which 
they would not bear otherwise. Is that wise? In one 
sense it is. In one sense it is right and proper that a 
man should pay exchange just as much as he should 
pay freight; but, sir, no man and no set of men in the 
commercial community can pay these exchanges with¬ 
out an immense cost. But will it not be a bnrden to 
some parties ? Yes, it will be a burden to the banks 
if they are required to do it. Then will it not be an 
act of injustice to require it of the banks, to charge it 
to them as a part of the consideration by which they 
shall pursue a banking business ? Why ? Because 
they can do this business cheaper than any other asso¬ 
ciation of men or any other men; and it is but fair, 
they receiving the privileges they do from the Govern¬ 
ment, that they should in some way compensate the 
community for these privileges. 

I might, if I had time, perhaps say a little more on 
this report. I regret that I can see no possible good to 
result to any class of men if it should be adopted by the 
Congress of the United States. I cannot see that it 
promotes expansion if anyone wants expansion; I can¬ 
not see that it leads directly to specie payments ; but it 
seems to me that it postpones the day about as much 
and about as far as from the present hour to the be- 
gining of 1878. 

Mr. Flanagan. Mr. President, I am opposed to 
this bill and propose to submit a few reasons for my 
conclusion. It is said by my distinguished friend from 
Indiana, [Mr. Morton,] for whose opinions I have the 
very highest respect whether I am with him or against 
him on any measure, that the country wants a settle¬ 
ment of this great question. Surely upon that branch 
of the subject between him and myself there is no issue. 
The people do want a settlement. They simply de¬ 
mand, however, that which is due to them and has 
been for many years by solemn law. They want a 
settlement; they want gold for the paper that they are 
holding. That is the settlement which they want. 

If this Government owes this money, as we know it 
does, there can be no successful answer to the proposi¬ 
tion that it should honestly and faithfully come up to 
the work and vindicate the character of the nation and 
its ability by making good your solemn pledge; and 
until you have done that, you never will satisfy the 
American people. I care not whether a man be a 
Democrat or whether he be a Republican, or what he 
be politically ; he demands the amount you owe him at 
your hands. 

Tell me not that it will prostrate the Republican 
party if this compromise is not effected and accepted. 

I say if the Republican party is to be perpetuated upon 
a platform of bankruptcy, it is time that it was disrupt¬ 
ed and let others take hold of it who are capable and 
honestly disposed to do that which is beneficial to this 
mighty nation. If there be any Republicans, I am one 
of them; but I am no Republican at the expense of the 
honor of this great nation. I am opposed in every 
sense of the word to this compromise. Indeed there 
is no compromise in it. I am reminded of a little oc¬ 
currence that illustrates this matter to me very well, to 
say the least of it. 

About fifty years ago there was a very distinguished 
lawyer living in Kentucky by the name of Haggin. 
Haggin lived in Lexington, one of the leading members 
of that bar,and that bar at that day was scarcely rivaled. 
The great Clay, Bledsoe, John Rowan, and a host of 
other distinguished men that the reader of American 
history is familiar with belonged to that bar. Haggin 
was a member, and a prominent member, of that bar. 
He was informed that there was a widow living in the 
neighborhood who had about $2,000 to loan. The 
money would be convenient to him and he applied to 
her for it. He was above suspicion, and she very read¬ 
ily brought out the $2,000 and handed it over to Mr. 
Haggin. Haggin drew his note for it at twelve months 
after date, but at the bottom of the note he added a few 
little words : “Provided”—just about like this beauti¬ 
ful little play is here that the Secretary of the Treasury 
may do so and so—“Provided the said Haggin is not 
to be hastened.” [Laughter.] When the note fell due, 
that happy period when my friend (Mr. Morton) says 
everything will be perfectly lovely, with no difficulty in 
the world, so that we shall be all right, it was not ex¬ 
actly so with Haggin. Mr. Haggin was not ready to 
respond. The lady called upon an attorney and insti¬ 
tuted suit. Upon the trial Mr. Haggin pleaded “there 
is a qualification which was part and parcel ot the note 
I made that I am not to be hastened.” The judge, 
however, did not see it in that light. The judge ruled 
that the gentleman w'as to be hastened. Frequently 
thereafter when the lawyers through the State were 
riding in company—and I take it for granted my friend 
behind me (Mr.McCreery) was with them occasionally- 
a horse would lag behind and the rider would spur it on, 
and the others would say to him, “You know he said he 










64 


THE FINANCIAL RECORD. 


was not to be hastened,” (laughter,) and then how the 
rider popped the spur into him and brought him up ! 
Now pop the spur into the Union and make the Union 
come up to the honest declaration of the Congress of 
the United States to pay this money that is due, as the 
said Haggin had to do. 


Spirit of tlie Press. 

[Chicago Inter-Ocean.] » 

The President has placed himself far in advance of 
the head of the column of specie resumptionists. Gree¬ 
ley was mercilessly ridiculed and beaten in the Presi¬ 
dential race, mainly because of his absurd epigram: 
“The way to resume is to resume.” But the President 
repeats the hasty proposition with solemn amplifica¬ 
tion. “The particular mode selected to bring about a 
restoration of the specie standard,” etc., the President 
thinks is not of much consequence ! The President would 
repeal the legal tender act. There was in this country 
one man—Thomas H. Benton—who, were he living, 
would do likewise; but he is dead, and his counterpart 
lives to-day only in the person of the President; for the 
boldest bullionist in the country outside the presiden¬ 
tial chair dare not propose such a measure of repudia¬ 
tion. On the strength of the legal tender clause of the 
greenback act, the whole existing debt of the nation 
was funded. There are in the hands of the people to¬ 
day §382,000,000 in greenbacks, accepted and held on 
the good faith of the pledge of Congress, that they 
shall be receivable for all debts, public and private, ex¬ 
cept custom duties. The repeal of the legal tender act, 
to take effect July 1, 1875, would paralyze every in¬ 
dustry and prostrate every commercial enterprize de¬ 
pending at all upon calculations for the future. 

[N. Y. Commercial Advertiser.] 

The harmony between the President and Governor 
Dix on the financial question has a fresh illustration in 
the letter from the Governor to General Grant, in which 
he expresses his concurrence in all the suggestions of 
the recent “memorandum.” He also endorses, to the 
fullest extent, the “bullionist” ideas of the President, 
and would expel from circulation all bills below the 
denomination of $10. The Governor's able message in 
April, wherein he advanced sound financial idea s which 
were at once accepted by the people of the State and 
by the Legislature, is not forgotten. It had a percepti¬ 
ble influence in molding public opinion and in check¬ 
ing the clamor of inflationists. 

[Cincinnati Gazette.] 

The President proposes that in two years the green¬ 
backs shall be paid in coin and burned, and that their 
presentation for payment shall be forced by rescinding 
their legal tender quality. Unquestionably they would 
be presented for payment as fast as the Treasury could 
receive them, and at this rate the whole amount of green¬ 
backs and fractional notes, making 430 millions, would 
be withdrawn, and the volume of currency would be 
contracted by more than 54 per cent. If a contraction 
of four millions a month raised a popular outcry, what 
would such a contraction as the President proposes ? 
The retirement of four millions a month was out of the 
surplus which came into the Treasury, and it cost the 
government only the actual value of the greenbacks; 
but now the President proposes to convert them at 
their face into gold bonds. 

[Richmond Enquirer.] 

The time was when the President of the United 
States communicated his views upon public questions 
only in an official message to Congress. The time 
was, too, when the President rarely exercised the veto 
power, except when constitutional questions were in¬ 
volved. The voice of Congress duly expressed upon 
matters of policy, merely, was final, and the Executive 
did not interfere nor attempt to dictate. But all this is 
changed, and the country is edified by the pleasant 
spectacle of the President attempting to dictate to Con¬ 
gress the financial policy it should adopt. No predeces¬ 
sor of his wasever guilty of such unblushing effrontery, 
and we sincerely hope that even this Congress will have 
the manliness to resent in a proper manner this gross 
indignity. 

[Waterloo (Iud.) Press.] 

It is given out from Indianapolis that the coming con¬ 
vention will indarse the financial views of Messrs. Mor¬ 
ton and Pratt. On general principles we favor such en¬ 
dorsement, hut when it comes to particularizing their 
financial views, we had rather be excused. We dis¬ 
tinctly remember how the Indiana Republicans on a 
certain occasion endorsed Pendletonism, and then, in a 
few months swallowed it all like little men. Let us not 
be led off after any more financial quacks, if you please. 

[New York Herald.] 

Congress has very often and very lately, also, been 
made aware that the President of the United States is 
a very important part of the law-making power. His 
legislative capacity, stated at its lowest quantity under 
the Constitution, is equal to the difference between a 
majority vote and a two-thirds vote of both Houses, 
and at its highest, considering the political difficulty of 
getting a two-thirds vote in favor of any measure, his 
capacity practically outdoes that of both Houses to¬ 
gether. It is to be hoped this fact will be kept in view 
by the gentlemen who are just now sharpening their 


quills or picking out new steel pens to deprecate the 
course of the Executive in seeming to dictate to Con¬ 
gress, by his letter to Senator Jones of Nevada, what 
should be done in the way of financial legislation. 

[Savannah Republican.] 

In the present depressed condition of business affairs, 
the inflation programme has a tempting look, and com¬ 
mands the sympathy of the South and West; but with 
an increase of trade, and an influx of immense crops, 
the constituency of Congress will learn more towards 
resumption, and favor more kindly the abolition af an 
inflated currency. This seems to be the opinion of 
some of the leading journals elsewhere, and warrants 
the belief that if the next Congress is called upon to 
decide the financial programme of the government that 
it will endorse a part, if not all, of Grant’s scheme for 
resumption and free banking. 

[Cleveland (O.) Herald.] 

We promptly and unequivocally condemned the man¬ 
ner in which the President gave to the public his latest 
views on the financial question. A careful examination 
of the remarkable scheme propounded in his extraordi¬ 
nary manifesto shows the matter to be as objectionable 
in some respects as the manner. It is not surprising 
that, as the telegraphic despatches from Washington 
say, the sentiment of Republican Congressmen is, with 
very few exceptions, adverse to the policy recommend¬ 
ed by the President. Even the “hard money men”— 
with the exception, perhaps, of Senator Jones, whose 
reputed wealth being enormous and lying in mines of 
the precious metals would benefit by the financial rev¬ 
olution that would ruin nearly every one else—are 
staggered by the plan proposed. 

[New York Journal of Commerce.] 

Nothing in the whole range of our financial errors 
has been more demoralizing than this free loan (of 
greenbacks) forced upon the people. When the 
Treasury notes were at first issued they were interest- 
bearing, and had a stated time to mature. Then there 
came an issue without interest, but receivable for cus¬ 
toms, and redeemable in gold. Then came these prom¬ 
ises which were forced upon the community, not only 
with no date for their redemption, but which were par¬ 
tially repudiated by the very authority issuing them, 
as they were not received for a large portion of the 
dues daily coming from the taxpayers to the Govern¬ 
ment Treasury. They were broken promises at the 
outset, and have been a standing disgrace to the coun¬ 
try ever since. 

[Milwaukee Wisconsin.] 

The principles which the President enunciates are 
those which were often declared by Thomas Jefferson, 
Daniel Webster, Silas Wright, Andrew Jackson, and 
Tom Benton. But they are unpopular in these latter 
days of speculation, waste, and extravagance, and it is 
a grave question, yet to be tested, whether the people 
will sustain them. Of course, if Congress adjourns 
without a permanent settlement of this question, and it 
goes to the peop’e, it must be carried back to all the 
congressional and senatorial elections of the next year. 
The inflation leaders would be wise if they should sur¬ 
render at once and come back to the sound doctrines 
enunciated in this letter. It is their only salvation, for 
when this financial issue is referred to the people, the 
more thoroughly it is discussed, the more clearly will 
the laborer perceive that it is for his interest that the 
United States currency should rest on the solid basis of 
coin, and that an American dollar should be the dollar 
bf the world. 

[Traverse Bay (Mich.) Eagle.] 

We notice a call has been issued, signed by J. P. 
Cook, of Hillsdale, Thos. S. Cobb, of Kalamazoo, and 
E. A. Brown, of Berrien Springs, for a mass conven¬ 
tion to be held at Lansing, August 6th, “to take such 
steps as may be deemed advisable to secure the organ¬ 
ization of a party on the basis of live issues, and for the 
restoration of purity and statesmanship to the high 
places of our State and National Government.” The 
Grand Rapids Democrat, one of the strongest suppor¬ 
ters of the movement, hastens to bring forward its per¬ 
nicious inflation doctrines and insists that they shall be 
engrafted in the creed of the new party. Should the 
Democrat succeed in its endeavors this attempt to organ¬ 
ize a new party will prove one of the most ridiculous 
failures of the day. We believe it possible to organize 
a party which shall advocate principles that will insure 
its success, but repudiation, or inflation, which amounts 
to the same thing, is not one of them. 


A Hard-Money Governor. 

Governor Davis, of Minnesota, anticipated the Pres¬ 
ident in his financial views. On the 18th of May, the 
workingmen of St. Paul held a meeting in the Court¬ 
house Square, and Governor Davis addressed them by 
invitation on the following resolution: 

That we favor a financial policy for the Government 
to issue a circulating medium to the people, based upon 
the faith and resources of the nation, without the inter¬ 
vention of national banks or other monopolies, and re¬ 
ceivable for all debts, public and private. 


The policy set forth in the resolution and advocated 
by some workingmen, is that of unlimited government 
shinplasters. Governor Davis didn’t favor that policy. 
He began by explaining very clearly what money is 
and how it came to be used ; showed that true money 
was not merely a representative of value, but a valuable 
thing—a true equivalent in exchange; and that all civil¬ 
ized nations, ancient and modern, had adopted gold and 
silver as the best medium of exchange and standard of 
value. He utterly rejected the delusion that Govern¬ 
ment has power to create value by statutory enact¬ 
ments. Upon these points he said : 

Nothing can be clearer than that the Government 
does not make the mass of metal valuable. It only 
certifies to a pre-existing value, a value which would 
exist just the same if all the Legislatures which ever at¬ 
tempted to enact that two and two make five should 
deem that gold in dust, nugget or bar should be worth 
nothing. In discussing these financial problems you 
can never grasp too firmly the idea that the gold or 
silver coin represents absolute and inherent value. If 
you hammer it out thin, so that the stamp or inscrip¬ 
tion cannot be seen, or throw it into the crucible and 
melt it down, it is worth just as much as it was before, 
less the fixed and small charge for coinage and the in¬ 
terest on the value of the metal while it is undergoing 
this process. Nor can you grasp too firmly the idea 
that no credit whatever is represented in it. The Gov¬ 
ernment did not produce it. It represents the labor 
the costly labor which some man has put forth to ob¬ 
tain it. It is not a promise to pay, but it is a 
present payment itself. He who has it holds it by 
assignment immediate or remote from him, who found 
it, dug it, transported it to the mint and first put it into 
circulation. It is to day the real money of the world. 
It is not valuable because common consent has agreed 
to call it so. It is valuable because it represents toil. 
It is the measure of value because, of all valuable sub¬ 
stances which are yet known, it lias been found to be 
most convenient as a standard. 

Gov. Davis then sketched the history of paper money 
experiments in this and other countries, showing that 
paper money based upon anything but specie is a de¬ 
lusion and a snare; and that paper money professedly 
based on specie is productive only of disaster so long as 
it is irredeemable. He proved very clearly that the work¬ 
ingmen were more deeply interested than others in a 
uniform standard of values, because labor is the last 
to rise under inflation, and the first to fall under the 
inevitable contraction, and uttered some truths very 
frankly and vigorously, which the “cheap money” men 
not only in Minnesota but everywhere else, w r ould do 
well to treasure up. He said: 

These considerations show unmistakably that the 
workingman is interested in a steady and invariable 
currency far beyond any other member of the commu¬ 
nity. Every inflation beyond natural limits, which is 
the same as any inflation beyond the extent where re¬ 
demption is a possibility, is a direct blow at your best 
interest. No government can, as you request, establish 
a just standard of distribution between labor and capi¬ 
tal, by providing any national circulating medium ex¬ 
cept one which is redeemable in the current standard of 
value recognized throughout the world as such. Any 
“new way to pay old debts” is a delusion and a snare. 

* # * * * * 

If it is the meaning of your resolution that the gov¬ 
ernment ought to keep on in the error of its way and 
issue, time after time, an irredeemable medium such as 
that which we now have, then it is the duty of every 
man of whom you seek counsel to tellyou that you are 
petitioning for a subsidy to those forces which now op¬ 
press you in order that those oppressions may be made 
more unendurable in a progressive ratio of misery and_, 
distress. You wish to equalize prices—to establish just 
relations between capital and labor. You cannot do it 
by doubling the dose which has already made us sick. 
The government can, if it chooses, enact that a yard 
shall be six feet instead of three, but the result will be 
that the merchant will double his price, but he does 
not pay his clerk a cent more salary until wages rise 
long afterward in a laggard sympathy, and then they 
run equal to other commodities. In other words it 
takes more labor to buy the yard of cloth at the in¬ 
creased price than it did before. 

During this whole speech, which occupied an hour or 
so, the audience frequently applauded Governor Davis, 
and gave him three cheers before the meeting adjourn¬ 
ed. But that does not seem to mean that they agreed 
with him, for they adopted the very resolution the ab¬ 
surdity of which he had so thoroughly exposed. It is 
probable, however, that the majority of the people in 
Minnesota agree with him, if the St. Paul inflationists 
do not. 















FINANCIAL RECORD. 


“WE NEED ONE THING BESIDES MORE MONEY, AND THAT IS BETTER MONEY ."-Senator Zach. Chandler. 


VOL, I. 


FRIDAY, JUNE 26, 1874. 


NO. 21. 


The Financial Record willbe continued until further no¬ 
tice. and will be sent free of postage, to all persons who will re¬ 
mit 50 cents to the publishers. All editors who receive it are 
invited to send their papers in exchange. It will be no longer 
published by the American Social Science Association, 
but for the present, as heretofore, communications respecting it 
may be addressed to the Secretary of the Association, F. B. Sau- 
born, No. 5 Pemberton Square, (Room 21,) Boston ; aud all ex¬ 
change napers, public documents, etc., may be forwarded to the 
same address. 


The Spirit of Congress. 

Congress has adjourned, thanks to the hot weather, 
and from this date this department of the Financial 
Record is discontinued. We regret that our last 
chapter of the history of the session, though it includes 
such creditable passages as the repeal of customs moie¬ 
ties and of the Sanborn contract law, contains also the 
success of a currency bill in some respects as bad as 
any under d'seussion during the whole session. The 
bill has been signed by the President in spite of his 
memorandum, and has become a law. 

Mr. Wright, inflationist, made the conference report 
in the Senate, on the 18tli, signed by all the members 
of the committee, including Senator Stevenson, Mr. 
Dawes and Mr. Marshall, who have voted with the 
hard money men. The provisions of the new bill are 
as follows: 

(1.) National banks need not hereafter keep any re¬ 
serve against their circulation; (2.) each bank is to 
keep, as a part of the reserve still required, an amount of 
greenbacks equal to five per cent of its circulation, in 
the Treasury of the United States, to redeem its notes, 
and hereafter no bank is to redeem its notes elsewhere 
than at the Treasury or over its own counter; (3.) 
national banks may withdraw their circulation and 
bonds deposited to secure it, on deposit of greenbacks 
to a corresponding amount, but bonds on deposit can¬ 
not be reduced below $50,000 ; (4.) the legal-tender 
limit is fixed at §382,000,000, no part of which is to be 
treated as a reserve; (5.) the $54,000,000 of national 
bank currency to be redistributed under previous law 
is to be immediately issued on application, and the 
Secretary of the Treasury is to make requisition on 
banks in States having an excess, to return the curren¬ 
cy forthwith; (6.) if banks fail to return currency 
within thirty days, the Secretary is to sell bonds be¬ 
longing to banks to an amount sufficient to redeem the 
circulation required, the money to be held in the Treas¬ 
ury for that purpose, and all officers of the Govern¬ 
ment are required to send to the Treasury such notes 
of banks on which requisition has been made as may 
fall into their hands, but not more than $30,000,000 is 
to be so redeemed and withdrawn within the next year. 

When the report came up for action on Friday, Mr. 
Flanagan first spoke in opposition, saying that he 
thought the result showed that Congress was not able 
to grapple with the currency question. Mr. Edmunds 
approved of the redistribution, but spoke earnestly of 
the danger in weakening the reserves of the banks. 
Mr. Sherman replied, dodging the real point of Mr. Ed- 
munds’s argument, and assuring the Senate that the 
bill amounted to very little. Mr. Sargent pointed out 
that under this bill, the maintenance of a working bal¬ 
ance in the Treasury was prohibited, and he deemed 
that a dangerous feature. Mr. Stevenson made a hard 
money speech as an apology for signing the inflation 
report. Mr. Thurman announced his purpose to vote 
for the bill, because of the redistribution clauses, though 
he did not like all parts of it. Mr. Morton liked the 
whole bill still less than Mr. Thurman, but intended to 
vote for it as the only thing that could be had. There 
was next a long discussion between Mr. Morton and 
Mr. Edmunds, who found it difficult to make the Indiana 
Senator understand that the whole bank reserve re¬ 
quired by the old law was practically held as security 
against deposits, alone, since bills were not presented 
for redemption; and that, therefore, a reduction of the 


reserve weakened the security of the deposits. In the 
long debate that followed, Mr. Schurz expressed brief¬ 
ly, his approval of the redistribution scheme, but said 
that he could not conscientiously vote for any bill that 
legalized the issue of any part of the §44,000,000 reserve. 

The conference report was agreed to by 43 to 19. The 
following Senators, who have usually voted against in¬ 
flation, supported the bill: Chandler, Cooper, Cragin, 
Gilbert, Kelly, Scott, Sherman, Stevenson, Thurman, 
and Wadleigh; chiefly, we may suppose, because of 
the redistribution clauses. 

Mr. Dawes took charge of the bill in the House. lie re¬ 
gretted that it did not provide for any contraction or the 
fixing of a day for resumption, but he approved all the 
provisions of the bill nevertheless. Gen. Hawley made 
an admirable five minutes speech in which he protested 
against the inflation in the bill most earnestly, while 
favoring any redistribution of bank currency that may 
be necessary. Messrs. Hale of Maine, Kelley and 
Randall next gave widely different reasons for support¬ 
ing the bill. Mr. Cox said that a great part of the 
measure was “broth or froth,” and he upbraided the 
Democrats for losing a great opportunity. Mr. Holman, 
a Democrat, quickly followed in advocacy, and after 
some further debate the vote was taken, yeas 221, nays 
40, barely forty, among whom were thirteen New Eng 
land members, four from the Pacific States, three from 
Texas, three from Maryland, ten from New York, two 
from New Jersey, four from Pennsylvania, and one 
from Alabama. The forty included 23 Republicans 
and 17 Democrats. The President made haste to sign 
the bill, although Senator Jones had voted against it. 
We give elsewhere a part of the debate in the Senate. 

The Party Conventions. 

Within the past fortnight several important political 
conventions have been held east and west,—indepen¬ 
dent conventions in Indiana and Illinois, Republican 
conventions in the same States and in Maine and Ver¬ 
mont, and a Democratic convention in Maine. The 
action of these assemblies on the currency question is 
significant, representing various shades of opinion from 
the wildest paper money nonsense to the Advocacy of 
a sound money basis, and including also two platforms 
fondly believed to be big enough to support everybody. 

First in order we mention the Indiana independents, 
who solemnly resolved with a Hoosier whoop that the 
“specie basis fallacy” should be abandoned, all nation¬ 
al bank-notes withdrawn, and Government issue a 
plentiful supply of notes to be legal-tender for every¬ 
thing, to be declared equal to gold, and interchangeable 
with bonds payable in paper. It would be a waste of 
time and white paper to dwell on this absurdity. The 
Illinois independents stopped just short of the declara¬ 
tion against specie, but their nostrum for the cure of 
financial distress was precisely that of their Indiana 
brethren, and its adoption would (if anything can) in¬ 
evitably extinguish the “specie basis fallacy.” 

Next came the Republican platform of the same 
States. Indiana favors an unlimited increase of nation¬ 
al bank notes, and an addition to the legal tender cur¬ 
rency to be measured by the wants of the people. 
This we presume is what Senator Morton would call 
“moderate expansion.” The convention was wholly 
under the dominion of the inflationists and passed a 
resolution approving the course of Senators Morton and 
Pratt. But in order to give hard money men a foot¬ 
hold, the President was also praised. When the con¬ 
vention was held this might have meant something, 
but since the executive approval of the last currency 
abortion, the platform has become one for inflation 
pure and simple without a square inch of standing room 
for any man who favors good money. 

In Hlinois there was a contest. The committee on 
resolutions reported three resolutions on the subject of 


the currency. The first called the greenback currency 
safe and convenient, and declared it inexpedient “to at¬ 
tempt a policy of immediate cancellation of any por¬ 
tion” of the issue ; the second favored the privilege of 
unrestricted bank issue; and the third, having reiter¬ 
ated the pledge of the national convention of 1872 in 
favor of an early return to specie payments, added: 
“That we are opposed to any increase in the amount 
of legal-tender notes and favor a gradual retirement of 
the same, as the volume of the national bank-notes 
shall be increased.” This last sentence raised a storm. 
Motions to strike it out were made all over the hall, 
and ^fter a brief debate the convention voted against 
the sentence by a large majority, and it was struck 
from the resolution. The rest of the platform was 
adopted, absurd and inconsistent as was the position 
in which this action left the convention. “I hereby 
declare,” says the drunkard, “that the liquor I drink is 
good for me, and that I need more of all kinds than I 
now take. But I renew the pledge of my youth to be 
a teetotaller at the earliest practicable day.” Senator 
Logan made a speech to this convention, and some of 
the Western newspapers have devoted good wit to ridi¬ 
culing it; but it was not a more absurd speech than 
several he has made in the Senate during the session. 

It is refreshing to turn from these utterances to the 
resolutions ofthe Eastern conventions. The Vermont 
republicans declared a redeemable currency to be the 
only safe and honorable money, and condemned all 
steps direct or indirect in any other direction than to¬ 
ward early resumption. The Maine republicans not 
only pronounced for hard money, but, for the present, 
as the time when the movement for resumption should 
begin. And finally, the Maine Democrats denounced 
an irredeemable currency as a great evil and called for 
speedy resumption. 

These resolutions are interesting, but they are chief¬ 
ly important, as showing the division on the question 
that exists in the republican party. The hard money 
papers of that persuasion in the west t y to show that 
inflation has not been approved, but the attempt is a 
melancholy failure. The party in the East is for hard 
money ; in the West a majority is for inflation. It re¬ 
mains to be seen, whether the minority will yield iheir 
convictions, or will seek elsewhere for party associates, 
who believe with them on this paramount issue. They 
will, probably, find that on this question, there must 
be a new division of parties, and the sooner they recog¬ 
nize it the more consistent and honorable a record 
will they have. 


The Currency Compromise. 

In another column, we have given the substance of 
the new currency bill. Below we quote, from the 
Boston Advertiser, the objections of a practical finan¬ 
cier, of skill and insight, to the astonishing provisions of 
the new law in regard to bank reserves. We desire to 
take away nothing from the severity of condemnation 
there expressed against the law, as endangering the se¬ 
curity of depositors and favoring unsafe banking. But 
it may be well to point out that, as between the Gov¬ 
ernment and the people in their political relations, the 
act is far better than the vetoed bill. That inflated the 
greenback circulation directly §18,000,000 beyond the 
point fixed in the new law, which also, we believe, al¬ 
lows the Secretary of the Treasury to call in the other 
§26,000,000 of the “reserve,” and bring the aggregate 
of greenbacks down to $356,000,000; that is to say, 
there is no actual inflation in the new law beyond what 
has practically existed, ever since Secretary Richard¬ 
son illegally issued the §26,000,000 last autumn,and there 
may be actual contraction by recalling those once can¬ 
celed greenbacks. Government inflation is therefore 
stopped. Bank inflation may begin at once, under the 


/ 






























G6 


THE FINANCIAL RECORD. 


the new law, and may be indirectly aided by the Gov¬ 
ernment and the greenbacks, as the Advertiser shows 
by figures. But the policy of the Government is now 
definitely established against inflation, and this is a 
great point gained. The new law is in harmony with 
this policy, though it contradicts the Grant Jones 
memorandum in several respects. Upon the whole, 
while business has every reason to dread the new law, 
political economy is not so insulted by it as it was by the 
vetoed bill, inasmuch as the depositors in each bank 
may, if they choose, compel the banks to guard their 
interest much more securely than the new law requires. 
Moreover, the obvious dangers under the law will nat¬ 
urally make the Government more strict and circum¬ 
spect in its dealings with the national banks ; so that 
out of this nettle danger, Secretary Bristow may, after 
all, pluck the flower safely. 

Letter of “C. E. B.” in the Boston Advertiser. 

It would have been thought impossible a few weeks 
ago that Congress could do anjsihing in the way of 
financial legislation which would sink it in public es¬ 
teem. But, as even in the lowest depths a lower one is 
to be found, so the bill which has just commended itself 
to the wisdom of our senators and representatives dis¬ 
plays more recklessness of consequences and greater 
ignorance of the principles underlying sound finance ; 
it is more dangerous to the community and more 
discreditable to its supporters than either the act that 
was vetoed by the President or the bill that was reject¬ 
ed by the house. 

The present measure inflates the currency directly 
by twenty-six million dollars, which it makes a perma¬ 
nent addition to our irredeemable notes. This action 
is alike unconstitutional and inexcusable now, when 
peace is profound and the money supply excessive. 
Yet it is heralded as a fair compromise, because, it 
exacts eighteen millions less than extreme expansion¬ 
ists claimed. It is indeed just such a compromise as 
would be made by a man who satisfied a thief, desi¬ 
rous of pocketing a thousand dollars,by permitting him 
to depart with six hundred. The robber may well be 
contented, for everything has been yielded to him. He 
secures two-thirds of the plunder,and —it is settled that 
he can steal. 

But the indirect inflation obtained by releasing the 
reserve upon circulation is very much more consider¬ 
able. I have taken, as the basis of my calculation, the 
figures given in the bank return of September 12;— 
partly because this is the return quoted by the comp¬ 
troller of the currency to the present Congress, and 
partly because it is the last report made by the banks, 
when working upon a normal currency, before Mr. 
Richardson’s issue of canceled greenbacks. Figured 
thus, the released legal tenders will amount to $36,342,- 
653. If figured in accordance with the latest bank re¬ 
turn—that of February 27—the result would only vary 
by a trifling fraction, the total difference being but 
$200,000. 

The gross inflation secured by the present bill is very 
little less in amount and much more dangerous in char¬ 
acter than ti e increase of currency that would have 
been caused by the act which was vetoed by the Presi¬ 
dent, with the approval of the nation. This will be 
shown at a glance by the following statement: 

PRESENT BILL. 

Direct inflation.S'26,000,000 greenbacks. 

Indirect inflation per return of Sep¬ 
tember 12. . 36,342,653 do 

Total addition to currency.$62,342,653 all greenbacks. 

VETOED BILL. 

Direct inflation. 44,000,000 greenbacks. 

Less— 

Minimum contraction 
involved by calling 
home reserve, per 
return September 12,.. $17,190,923 
Minimum contraction 
on $46,000,000 na¬ 
tional notes. 5,525,390 22,716,313 do 

Net inflation...$21,283,687 greenbacks. 

Add national bank notes incieased 
circulation. 46,0u0,000 bank notes. 

Total addition to currency.$67,283,687 

Bad as is the showing upon this point, a further 
inspection of the “compromise” reveals even greater 
faults. If last fall’s panic proved any one tiling beyond 
dispute, it was the weakness of the reserve. The coun¬ 
try banks held but a small proportion of their liabilities 
at home, and whatever they held abroad has been bor¬ 
rowed from their agents upon unsalable securities. The 
New York banks lent upon gold, and loaded their re 
serve with speculator’s coin. It was a house built upon 
sand. So a little wind blew it over. 

At first Congress showed consciousness of this fact, 
and of the popular demand for an improvement. Its 
early financial measures provided for holding at least 
three-quarters of the reserve in the vaults of the banks it 
was intended to protect. This hill ignores alike the de¬ 
sires of the public and the experience of the past. It 


throws out of the reserve, as it existed at the- date of 
the last bank return, not only the §36,155 519 already no¬ 
ticed, but S16, ( J80,147 transferred from the banks to 
the Treasury, as a provision for redeeming the very 
liabilities which the first sum now secures. And the 
latter amount may be taken—nor from the balance in 
the hands of agents, whereupon interest can still be 
received, but from the money held at home, which, of 
course, earns nothing. 

The condition of the present inadequate reserve, 
after all these deductions have been made from it, 
would be incredible, if arithmetic were not an exact 
science. The total provision to secure §595,350,334 
individual deposits will be only §69,604,438, or a trifle 
over 11 1-2 percent. Against liabilities for individual 
deposits and outstanding circulation to the amount of 
§934,953,286, the reserve held need not be larger than 
$86,584,585, or almost exactly 9 1-4 per cent. But 
even this ridiculous protection is not entirely available. 
Nor is it distributed with anything like equality. In 
the case of the country banks it reaches its greatest at¬ 
tenuation. In fact, unless you take a microscope, it 
disappears from sight. 

Figured as a whole,—a manner of calculation which 
is very nearly, although not exactly, correct,—thecoun- 
try,banks will be required by this bill to hold at home 
no more than $4,038,464 to secure §264,485,861 in¬ 
dividual deposits, or 1 1-2 per cent, of the liabilities 
covered, while in New York, on the other hand, where 
the proportion will of course be at its highest, the vic¬ 
ious practice of counting gold as money, while still un¬ 
usable as currency, will continue to destroy the relia¬ 
bility of the reserve. Is there a banker of experience 
throughout the world who will say that such a provi¬ 
sion affords more than the merest mockery of security ? 


The Currency Debate. 

We have already explaiued the provisions of the law 
which was passed in the last days of the session and 
partakes of the unsatisfactory character of all such leg¬ 
islation. In the debate upon it in the Senate, some 
striking things were said, which we may quote. Mr. 
Schurz, who has scarcely spoken for two months, hav¬ 
ing been ill, said: 

Mr. Schurz. I do not intend to prolong this de¬ 
bate, Mr. President; in fact I have neither the strength 
nor the disposition to do so ; but I merely want to 
state in a few words, my position with regard to this 
bill. There are some provisions in it which I approve 
of; among others, the redistribution of the currency— 
this for two reasons : In the first place, it will, in part, 
at least, remove that injustice which has grown up un¬ 
der the law as it now stands ; and in the second place, 
it will dispel some of the delusions which seem to exist 
here and there, especially in the Western and the 
Southern States. I should, therefore, gladly vote for 
that feature of the bill and desire' it to become the law 
of the land. In fact, I have voted several times for it. 
There are, however, other things in this bill, and espec¬ 
ially one which will scarcely permit me to support 
this particular measure as a whole. The one I 
refer to particularly, is this : This bill legalizes 
the issue of part of what was called the $44,000,000 
reserve. I for my part, with nthef Senators have al- j 
ways considered that so-called reserve, no reserve at 
all, but upon conscientious investigation of that subject 
I have believed, and do now firmly believe, that the 
§44,000,000 were retired, canceled, destroyed, wiped 
out as part of the legal-tender circulation, and could 
not legally be put out again. 

I hold also, as a logical consequence, that any ex post 
facto enactment legalizing the reissue of any part of 
those retired United States notes would amount virtu¬ 
ally to a fresh isme of irredeemable paper currency as 
a legal-tender in time of peace, which, looking at it from 
the point of view of constitutional power or of sound 
policy, I cannot give my assent to directly or indirect¬ 
ly. Conscientiously holding this view, I cannot vote 
for any measure pretending to legalize the reissue of any 
part of the so-called forty-four million reserve instead 
of providing for the retirement of the amount illegally 
issued. 

Having paired off with the Senator from Illinois now 
absent, [Mr. Logan,] before he went West, upon all 
questions concerning finance, upon the assumption 
that he and I would naturally be on opposite sides, I 
shall have to abstain from voting. 

Mr. Stevenson of Kentucky, the Democratic mem¬ 
ber of the conference committee reporting the bill, said 
although supporting it: 

I have been reared, Mr. President, in a policical 
school whose founders denied that Congress possessed 
any constitutional authority to charter national banks. 
They warned us that the creation by Congress of large, 
irresponsible moneyed corporations might endanger the 
liberties of the country. Their political faith was that 
gold and silver constituted the only true standard of 
value and was the only currency known to and contem¬ 
plated by the .Constitution of the United States. 


While it is true that eminent statesmen differed on the 
question of constitutional power to charter a bank, all 
of them, from Alexander Hamilton to Andrew Jackson, 
including Daniel Webster himself, believed and argued 
that Congress possessed no’ power to substitute paper 
or anything else for coin as a tender in payment of 
debts and in discharge of contracts. Had this orthodox 
faith of the fathers been adhered to, what financial dis¬ 
tress and loss of property would have been spared from 
panics inaugurated by a fluctuating, deranged, depre¬ 
ciated currency; what an amount of debt would have 
been spared the country ! 

Our present national-bank system sprung from and 
was the direct outgrowth of the late rebellion. Its 
founder acknowledged it as a war measure, not sanc¬ 
tioned in peace by the Constitution. Congress has 
solemnly pledged itself to use all means and take 
all necessary steps for a prompt redemption of this 
paper currency. Nine years have passed away since 
the cessation of hostilities, abundant harvests have 
blessed the labors of our people, and yet Congress is 
urged at this session to increase the volume of green¬ 
backs and national-bank currency without providing 
means for its redemption in coin. I felt constrained to 
resist this proposed inflation. I was at all times ready 
to legalize to the amount of twenty-six millions of green¬ 
backs illegally put into circulation by the late Secre¬ 
tary of the Treasury and keep them in circulation. I 
favored a redistribution of the circulation of green¬ 
backs upon the basis of wealth and population and de» 
sired a transfer of fifty or sixty millions from the East 
to the South and West. I desired a reduction of the 
tax upon the circulation of State banks from its present 
unjust standard to that imposed upon the natioual 
banks. I could not and will not cast a vote to inflate 
the currency of national banks, nor could I vote for 
free banking except on a basis of redemption in gold 
and silver. I have been charged with open misrepre¬ 
sentation of my constituency in my votes on the cur¬ 
rency question. I have received no such expression of 
the popular sentiment in Kentucky as enables me to 
say whether my constituency approve or disapprove 
my course in resisting inflation. I am proud to say 
I have received neither in the democratic press of my 
State nor by private letters any proof of such popular 
disapprobation. I have in every vote which I have 
given on this currency question followed old demo¬ 
cratic land marks illustrated by Jefferson and Jackson 
in their adherence to a sound, fixed standard of value. 
While I have not sought to hasten a speedy resump¬ 
tion of specie payments or given any vote looking to 
such an immediate result because I did not wish to pro¬ 
duce sudden contraction, I have, upon the other hand, 
sought steadily to prevent an inflation of the currency 
in irredeemable paper, or free banking on a paper basis, 
but preferred quietly to hold to our present position, 
which I trust will lead to specie resumption during the 
next three or four years. 

Mr. President, the people of Kentucky have a large 
experience on the subject of a depreciated paper cur¬ 
rency. They are not easily persuaded that one paper 
depreciated dollar can be converted into two dollars 
by cutting it into two parts. Their native sense tells 
them that the value of a currency is to be measured 
by its purchasing capacity on a standard of gold and 
silver. They will not he deceived. They know that 
the laboring masses have the deepest interest in a 
sound, stable currency convertible into specie. What¬ 
ever it costs to convert the depreciated paper money 
received by the producer or laborer into specie is a loss 
to that extent upon them. The greater the excess of 
our paper circulation above the business wants of the 
country the greater the depreciation of our p^per cur¬ 
rency below a specie standard. It is this excess which 
I desire to avoid. The only test of an excess of circu¬ 
lation is to he found in the fact that .our greenbacks or 
paper promises to pay twenty or one hundred dollars 
can only be cashed by the laborer or producer who re¬ 
ceives at one hundred cents on the dollar at eighty- 
eight cents. An American dollar should buy a silver 
dollar in England, adding the cost of transportation, 
because the laborer received it here as a silver dollar. 
But take our greenbacks to England and (outside of 
the cost of transportation) they would be received by 
labor for its purchase there at a fraction of a little over 
eighty-five cents. The producer or laboring man 
would by practical experience learn where the loss 
would fall. 

Senator Morton said among other things:—One of 
the good features of this report is that it abolishes what 
is called the §44. 000,000 reserve. It destroys that idea. 
What was that idea 1 That there were §44,000.000 in 
the Treasury, the difference between §356,000,000 and 
$400,000,000, that might be issued when needed, and 
when the pressure had passed by should be taken back 
into the Treasury, and if you pleased canceled in the 
Treasury or laid away as reserve, and not as a part of 
the working balance. When the panic began the Treas¬ 
ury had a working balance of about $13,000,000 that 
was wholly distinct from the reserve, and the Govern¬ 
ment did employ, I believe, the entire working balance 
in the purchase of bonds, commencing about the 20th 
of September. But afterward, when the revenues ran 



























THE FINANCIAL RECORD. 


67 


short, the reserve was brought out, not as a part of the 
working balance, but as a reserve, entirely indepen¬ 
dent of the $26,000,000 afterward issued. The theory 
was entertained by the Secretary of the Treasury, and 
it has been lately restated in the President’s veto mes¬ 
sage, that this was a balance to be preserved, kept on 
hand for emergencies, so that under that theory the 
Secretary of the Treasury could contract the currency 
in circulation, independent of the necessary working 
balance of ten or fifteen millions, with the first surplus 
revenue at his command to the amount of $26,000,000. 
That is a perpetual threat hanging over the country. 
That power is taken away distinctly by this bill. 
Therefore the fear of contraction resulting from taking 
back into the Treasury the $26,000,000 of the $44,000,- 
000 reserve has been taken away. 

Mr. Flanagan. If no other Senator is disposed to 
present any opposition to this measure it is very un¬ 
necessary lor me to do so ; but my opinion is, that it 
would have been better for this report to have slept for 
all time to come. It begins in nothing as I conceive, 
and ends most beautifully likewise. If there is begin¬ 
ning or end to it I have not been able to find it. I sup¬ 
pose this is the action of the Congress of the United 
States after Having been six months earnestly and 
closely engaged in endeavoring to do something toward 
the resumption of specie payments, a subject that at 
last has been studiously, ingeniously, and well avoided, 
for it is ignored in every sense of the word. It is mere¬ 
ly in my opinion the first direct step to repudiation. 
It is nothing else. It is nothing else; surely it is noth¬ 
ing more, for in it the idea of a specie resumption at 
any day, either direct or remote, is not alluded to, if 
I recollect the reading correctly. 

Under this bill I have no hesitancy in saying here 
that $20,000,000 in the next current year will not be 
removed from the North for banking purposes West. 
I have no objection, so far as I am concerned, that every 
dollar of it shall be removed ; but there will be no de¬ 
mand for it, as I conceive, to the amount contemplated 
here I interpose no objection whatever; but that is 
the only boon that I can perceive will be realized, if 
that should be, and I have no idea that it will be. But 
instead of meeting this great question as it deserves to 
be met, everything tending to a resumption of specie 
payments is directly ignored for the present. So re¬ 
garding it, and looking at the action upon this subject 
for months past, and invoking the history, if you please, 
not only of this nation from its earliest day to the pres¬ 
ent hour, but the history of the world, I am justified 
in holding that we shall get further and further from 
resumption. 

Free Banking 1 vs. Privileged Banking. 

BY ELIZUR WRIGHT. 

[From the Boston Daily Advertiser.] 

We hear now and then a cry, if not a clamor, for 
“free banking,” as if it were something of which, under 
our present government, the people were deprived. Is 
this so? Is anybody prevented from lending capital in 
any shape whatever, including his promise to pay, and 
receiving interest therefor, either restricted or unre¬ 
stricted ? Cannot any man buy on credit what any 
other man will sell him, including that other man’s 
note ? If so, it cannot be free banking the people are de¬ 
prived of, but privileged banking. This privilege of get¬ 
ting more than one interest for the same capital, coup¬ 
led with the restriction of liability, is something that 
transcends the mere freedom of banking. It is govern¬ 
ment favor of the banker at the expense of the public, 
and that is the reason it is so much hankered after. 

Paper is cheaper than gold ; and there is an economy 
in using it as money if its value can be made as stable 
and fixed as that of gold. This can be done, and done 
to perfection only by a government, which, without 
being obliged to keep any considerable amount of gold 
on hand, is sure to be able to purchase it, if needed, by 
making it exchangeable for gold at the will of the hol¬ 
der. But theclamorers for “free banking,” meaning by 
that privileged banking, ask that all which is saved by 
the superior economy of paper shall be given to len¬ 
ders, or rather to the proprietors of bank stock. There 
is no possible way in which borrowers and lenders can 
share equally and fairly in that economy, but in mak¬ 
ing the paper currency of the country to consist entire¬ 
ly of government greenbacks, convertible at the will of 
the holder into coin. 

This would interfere with privileged banking, but not 
with free banking. 

Nobody can pretend that it is either just or necessary 
that the government should realize a profit by buying 
in its greenbacks under par. That is not the objection 
to resumption. Nobody- but a victim of the gold gam¬ 
blers, or of the most dismal melancholy, can believe 
that our government could not, if it pleased,fund its 
whole non-interest bearing debt in less than six months, 
and the meaning of that is, it could resume in less time, 
with the certainty of being able to stay resumed. So 
it is not the want of ability. The detriment to the 
debtor class is the sole objection—there is not the 
shadow of any other—to immediate resumption. But 
the duty of the government is to be just and honest; to 
fulfil its obligations according to their true import, and 
not to grant special privileges to creditors or special 


protection to debtors. It is no part of its business to 
help a particular class of the people to pay its debts, 
and especially not if it is to do it by neglecting to 
pay its own debts. But the detriment to the debtor 
class is pretty much a bugbear. That class has sever¬ 
al times since the war stood sudden shocks greater than 
the rise of the paper dollar from 90 to 100 cents. It 
has to stand heavier shocks every year in the fluctua¬ 
tions of crops, of fashions, of fires, and its own over¬ 
sanguine calculations. 

What the great, honest, toiling majority of the peo¬ 
ple need is a yard-stick of value, as little changeable as 
the nature of things admit. Nothing of the sort can it 
have with privileged banking. If banking corporations 
can persuade Congress to withdraw its greenbacks and 
allow them to issue their paper ad libitum and lend ad li¬ 
bitum on their deposits, responsible only to the amount 
of twice their stock, the dollar will be the most uncer¬ 
tain thing in all futurity. By all means let banking be 
perfectly fee, but let it be done without privilege, and 
let the people be free to have coin or greenbacks con¬ 
vertible on demand into coin, if they prefer them to 
free bank shinplasters. It looks now very much as if 
the sole business of the national government was to 
distribute privileges, subsidies and exemptions, and as 
if a man who has nothing but his last month’s wages in 
greenbacks and the sinews to work more months, had 
no rights the government is bound to respect. It is 
not long ago that the honest soul of John Brown 
marched on through this country to good purpose. It 
is about time for another march of honesty to put an 
end to this national meanness or chronic repudiation 
towards poor creditors, while privileges and high inter¬ 
est are lavished on rich ones. 


Spirit of the Press. 

[Chicago Inter-Ocean.] 

The Springfield Farmer’s Convention was irritable 
on the subject of specie payments. Its temper was 
scarcely mild enough to induce members to listen to 
hard-money orators patiently. The same was true of 
the Indianapolis Convention, and the same will be true 
of every convention which assembles in the States of 
the North-west. It is impossible to force specie pay¬ 
ments without sacrificing the business of the country. 

[Cincinnati Gazette.] 

The 1st of April speech of Senator Jones was a de¬ 
claration of sound principles where charlatanism had 
bred infinite confusion. It is amazing that from the 
bogus State of Nevada, whose unsettled inhabitants 
number less than the population of three wards in Cin¬ 
cinnati, should come the only Senator who had a clear 
perception of the simple and immutable principles of 
money, and dared to state them in a simple and direct 
manner, and to accept all the consequences thereof. 
But when its main principles were accepted by the 
President, and presented to Congress as the standard 
by which he would apply the veto to inflation 
bills, then the speech of the Nevada Senator became a 
new departure in our currency policy. This pricked 
the bubble of inflation and brought many to their senses 
so that they are seeing simple truths which, in the wild¬ 
ness of paper money expansion, they thought we had 
outgrown. 

[Jacksonville (Ill.) Journal.] 

“If we could only compel the rest of the world to 
accept our greenbacks as the standard of money, in¬ 
stead of gold, then everything would be lovely for us, 
and we would say, “let the paper mills grind on.” We 
said this the other day, and the Springfield Journal now 
asks: 

“Was it gold or greenbacks that the bankers of Wall 
street cried for so lustily when the panic pinched them 
last fall ? If “greenbacks” were so good in a panic that 
the margin between them and gold actually declined, 
why should they not be good when the country is 
prosperous 

Nobody says that greenbacks will “not be good when 
the country is prosperous;” but the degree of their 
goodness will depend on the amount of them thrown 
into circulation. If greenbacks werer depreciated the 
farmer would still get no more for his grain, because 
the price is practically fixed by the demand from 
abroad; and the workman’s wages would not rise—at 
least not for a long time; while up would go the prices 
of everything which these classes have to buy. Hence 
we want to see the time come, as soon as practicable, 
when the greenback dollar shall bo as good as the gold 
dollar, and the working classes will not be the victims 
of the gold speculators of Wall street. 


Planks From the Platform. 

INDIANA REPUBLICANS. 

We are in favor of such legislation on the question 
of finance as shall make national banking free and 
shall furnish the country with such an additional 
amount of currency as may be necessary to meet the 
wants of the agricultural, industrial, and commercial 
interests of the country, to be distributed between the 
sections according to the population of each, as is 
consistent with the credit and honor of the nation and 
will prevent the possibility of capitalists and combina¬ 
tions of capital controlling the currency of the country. 


ILLINOIS REPUBLICANS. 

That as one of the consequences of the late civil war 
about $382,000,000 of non-interest bearing Treasury 
notes were issued to and are now held by the people as 
safe and convenient currency, it would be unwise and 
inexpedient in the present financial condition of the 
people to attempt a policy of immediate cancelation of 
any portion of such Treasury notes. 

That the laws for the establishment of national 
banks having secured to the States and Territories the 
best system of bank circulation ever before offered 
to the people, its issuance should be no longer confided 
to a privileged class, but should be free to all alike, 
under general and equal laws, the aggregate volume of 
currency to be regulated by the untrammeled laws of 
trade. 

That we reaffirm the declaration of the National Re¬ 
publican Convention of 1872 in favor of a return to spe¬ 
cie payment at the earliest practical day. 

VERMONT REPUBLICANS. 

That we stand by the oft repeated and cardinal doc¬ 
trine of our party; that a currency always redeemable 
in coin is the only true and safe one for the honesty 
and welfare of the community as it is for the honor 
and good name of the nation; that we condemn all 
steps, direct or indirect, in any other direction than 
towards early resumption; and that we earnestly 
thank the President for his steadfast and active sup¬ 
port of these principles by the exercise of his constitu¬ 
tional power. 

MAINE REPUBLICANS. 

It is a high and plain duty to return to a specie 
basis at the earliest practicable day, not only in com¬ 
pliance with legislative and party pledges, but as a step 
indispensable to lasting material prosperity. 

We believe t-fae time has come when this can be 
done, or at least begun, with less embarrassment to 
every branch of industry than at any future time after 
a resort has been made to unstable and temporary ex¬ 
pedients to stimulate unreal prosperity and speculation 
on a basis other than coin as the recognized medium of 
exchange throughout the commercial world. 

The Republican party of Maine approves of the ac¬ 
tion of the President in vetoing the bill known as the 
currency bill. 

MAINE DEMOCRATS. 

That an inflated and irredeemable paper currency is 
among the worst evils that can afflict a community. It 
enables cunning and unscrupulous speculators to rob 
producers of the fruits of their labors, and afflicts every 
reputable business with the peril of continual panic and 
disaster. We regard a currency based on specie re¬ 
demption as the very one upon which the business of 
the country can be safely trusted, and hold that we 
should as rapidly as possible approximate to such a cir¬ 
culating medium. 


Why not Refund the Debt? 

It is urged by those who object to the redemption of 
the greenback circulation, that it is our first duty to re¬ 
duce the interest-bearing debt and the rate of interest 
on that which will remain. We think the duty of re¬ 
ducing the debt and the rate of interest is an important 
one, and our objection is only to the method. It is not 
difficult to see that if we were to-day on a specie basis, 
our national credit would be so much improved that 
we could easily fund the debt at a lower rate. The 
matter of reduction of principal is simply a question of 
taxation. If, then, we wish to diminish the interest 
charge, the simplest and easiest way is to get rid of the 
floating debt which injures our credit, and the entire 
difficulty is then removed. 

The late Secretary of the Treasury did not take ad¬ 
vantage of existing law to fund the debt at a lower 
rate. To sell gold and buy sixes is a clumsy way of 
doing what might be done directly, and even this has 
been discontinued as a means of reducing the debt since 
the panic. The law of July 12, 1870, as modified by 
the act of January 20,1871, authorises the Secretary to 
dispose of five per cent bonds to the amount of five 
hundred millions at or above par in gold coin, and to 
use the proceeds in redeeming five-twenties. Why is 
this not done now ? What is there to prevent the Sec¬ 
retary from offering to sell new fives on the market at 
such a premium as he can obtain, and to call in five- 
twenties as fast as he can dispose of the new loan ? 
Even at one per cent premium the Treasury would not 
only save interest but actually make money by the op¬ 
eration. We do not know whether any syndicate agree¬ 
ment stands in the way of such a process, but, if so, the 
agreement ought to be terminated as soon as it can 
honorably be done. During the last nine months the 
increase of new fives has been eighty-three million dol¬ 
lars, or at the rate of a little more than nine millions a 
month. That this is too slow a rate is proved by the 
fact that the bonds are at a premium, which premium 
goes, not into the Treasury, but into the pockets of 
those who dispose of the loan. The country is there¬ 
fore compelled to pay a higher rate of interest than is 
necessary during the time employed in the negotiation 
of the loan, which is protracted needlessly, in order 
that the contractors may receive a large percentage in 
addition to the enormous profits of double interest.— 
Boston Advertiser. 



















^ntcrion $sth\ ^ssMiatitm, 

5 Pemberton Square, Room Ql. 

Boston, June 25 , 1874 . 


SPECIAL ANNOUNCEMENT. 

The Sixth Number of the Journal of Social Science, published by Hurd & Houghton, Riverside Press, Cambridge, and No. 3 Astor Place, New 
York, will contain a brief report of the General Meeting at New York, with nearly half the papers read there printed in full. Among the papers in 
this number will be, 

The Address of the President of the Association, George "William Curtis, Esq., of New York. 

The Report of the Secretary, E. B. Sanborn, of Concord, Mass., on The Work of Social Science in the United States. 

The Paper of G. Bradford, Esq., of Boston, on Financial Administration; that of David A. Wells, Esq., of Norwich, Conn., on Rational 
Principles of Taxation; that of Willard C. Flagg, Esq., of Moro, Ill., on The Farmers’ Movement in the Western States; and that of George T. 
Angell, Esq., of Boston, on The Protection of Animals. 

It is proposed also to include in this number the full proceedings of the Conference of Boards of Charities, with the papers read thereat, and 
the report of the Department of Social Economy on Pauperism in New York. The number will contain 200 pages and will be sold for One Dollar. 
Previous numbers of the Journal of Social Science can be obtained of Messrs. Hurd & Houghton, at $1.50 each. 

The rest of the papers read at New York will be printed in the Seventh number, to be issued in September, and among these will be Dr. Wool- 
sey’s Paper on International Law, the papers on Sanitary Subjects, and the Financial Discussion. The Sixth number will be issued about July 20, 
and the Seventh number in the latter part of September. A list of the officers and members of the Association will appear in connection with the Re¬ 
port of the New Yerk meeting 

GEORGE WILLIAM CURTIS, President, 

F. B. SANBORN, Secretary. 





FINANCIAL RECORD. 

“TTE NEED ONE THING BESIDES MORE MONET, AND THAT IS BETTER MONEY .’.’—Senator Zach. Chandler. 

VOL. I. FRIDAY, JULY 3, 1874. ~ N0.~22. 


The Financial Record will be continued until further no¬ 
tice, and will be sent free of postage, to all persons who will re¬ 
mit 50 cents to the Dublishers. All editors who receive it are 
invited to send their papers in exchange. It will be no longer 
published by the American Social Science Association, 
but for the present, as heretofore, communications respecting it 
may be addressed to the Secretary of the Association, F. B. San¬ 
born, No. 5 Pemberton Square, (Room 21,) Boston; and all ex¬ 
change papers, public documents, 6tc., may be forwarded to the 
same address. 


The Practical Effect of tlie Currency Act. 

Opinions seem to be greatly divided as to the effect 
of the patchwork act, passed by Congress at the close 
of its session. The division is not at all strange, con¬ 
sidering the present condition of business, and the care¬ 
less wording of the law. The act, so far as the volume 
of currency is concerned, naturally divides itself into 
two parts : (l)As to the greenback circulation, and (2) 
as to National bank reserves. The language of the 
law, in reference to legal-tenders seems to be explicit 
enough in declaring that $382,000,000 shall be the 
amount of such currency outstanding, and that none 
of it shall be counted as reserve; but as a matter of 
fact,there is nothing to prevent the Secretary from piling 
up in his vaults as many million dollars as his receipts 
exceed his expenditures. Even now he has a balance 
of about fourteen million dollars, whereas only two or 
three months ago he had but four millions or less. 
Under this law the Secretary may really contract the 
currency, to the full extent of his surplus; so that in 
this respect the act is contraction or not as the Secre : 
tary pleases. 

There is a much worse ambiguity in reference to the 
bank reserves. Reserves against circulation are abol¬ 
ished, that we all know; and the exact amount required 
for each bank is ascertainable by a simple "sum” in 
arithmetic. But where is it to be held! The new act 
requires a certain specified amount to be held in the 
treasury to redeem circulation, which may be counted 
as a part of the reserve held against deposits. Under 
the old law, which was not changed in this respect, 
all banks except those of New York City, may hold a 
certain part of their reserves with “redeeming agencies 
the rest must be kept in their own vaults. Now from 
which part of the reserves may the treasury redeeming 
fund be deducted ! The answer makes a vast differ¬ 
ence in the theoretical working of this law. 

To illustrate : Under the old law the banks of New 
Hampshire were required to hold reserves to the 
amount of $1,129,112, ( taking their reports for May 1, 
1874 for a basis,) of which $451,645 was to be held in 
their own vaults. Had the new law been in operation, 
they need have held but $445,055 (to meet instant liabili¬ 
ties of more than seven and a half millions!) and under 
the old system, $178,022 must be held at home,and $267, 
033 might be held in banks in“redemption cities." Now 
five per cent of the circulation was $228,019, and man¬ 
ifestly this amount must be subtracted either from the 
home reserve or that held by redeeming agents. If from 
the former, it would exhaust the whole sum required to bfi held 
in the vaults of the banks! In other words, the banks of 
New Hampshire might maintain their legal reserve 
without one dollar in greenbacks or in specie in their 
vaults. If from the latter, still these banks would only 
be compelled to keep on hand 2 1-3 per cent of liabilities 
which they might be called upon to meet at any mo¬ 
ment. It is only a trick of words to call such a sum a 
“reserve.” 

The old law says that banks shall keep so much at 
home, that they may keep so much with other banks. 
The comptroller of the currency has not decided whether 
the requirement is to-be relaxed or the privilege taken 
away. The decision must be arbitrary in either case, 
and, although there is a common sense side, and an ab¬ 
surd side of the question, the law will sustain one view 
quite as well as the other. In practice, this ambiguity 


is not of great consequence at present. Money is so 
abundant everywhere that banks could not, if they 
would, lend all that the old law required them to hold. 
On the 1st of May, all the national banks in the country 
held $58,000,000 above the reserve then required, which 
they could not lend. It is interesting to note, by the 
way, that almost $11,000,000 of this excess was held by 
the banks in the nine Western States, from Indiana to 
Kansas, inclusive. No prudent bank will take advan¬ 
tage of the removal of restrictions by the currency act. 

It would appear then that nothing is settled by the 
bill, except that national banks may, if they choose, 
take the direct road to bankruptcy. The volume of 
the legal-tender currency, still depends upon the Sec¬ 
retary of the Treasury, and the release of greenbacks 
locked up in bank vaults depends upon the condition of 
business and the wisdom pf bank directors. It is certain¬ 
ly true that business has revived since the act was passed, 
but clearly this is not to be credited to any relief given 
in the act itself, so much as to the certainty that there 
can be no more injurious legislation until the December 
session of'Congress. 

Grant’s First Surrender. 

IBoston Commercial Bulletin.] 

Despite his veto, and the memorandum of his views 
which, at the solicitation of Senator Jones, was made 
public, the President has signed the currency bill, and 
surrendered to the inflationists. Partisan sheets, that 
cannot quite admit the fact, try to smooth it over as 
best they can, but those who are outside of all political 
rings, and free from party ties, see as plainly as it is 
possible to see anything, that General Grant has been 
won over by the inflationists, and has put his name to 
a measure which certainly meets their views more 
nearly than those of any other class. It is a measure of 
inflation, neither more nor less,— ftf moderate inflation, 
it is true, but it carries with it the idea of curing finan¬ 
cial ills by issuing a new supply of irredeemable rags, 
and it contains no provision for resumption or any ap¬ 
proach thereto. 

It provides for letting out the reserves on circulation, 
increasing the total of currency by just that amount. It 
legalizes the issue of the §26,000,000 of what was called 
our “reserve," which was put out by Secretary Rich¬ 
ardson without even the color of law, and makes it a 
part of the circulation. It carefully provides in the 
section in which the ‘ redistribution” of the currency 
is arranged, that the issue of bills to new banks in the 
West and South shall be made before that outstanding 
from the Eastern banks is cut down, and this, in its effect, 
is expansion. It is true it provides for forced redemp¬ 
tion. This phase of the bill is doubtless contractive in 
its tendency. 

The question is not how much or how little the vol¬ 
ume of the currency will be increased by this measure. 
The action of its several sections is so complicated, and 
so much depends upon circumstances, that it is impos¬ 
sible to foresee results. Whether the inflation is a 
matterof thousands or of millions, the principle remains 
the same. The act of 1869 pledged the faith of the 
country that the outstanding circulation of irredeem¬ 
able paper should not in the future exceed $356,000,000, 
and that all the obligations of the nation should be 
paid in gold. This was a plain, straightforward state¬ 
ment, one whose meaning could not be misunderstood. 
It was taken f„r truth, upon the word of a great people. 
And what has Congress done ? Not alone has it broken 
its solemn 'pledge, but it has brought ridicule upon 
itself and upon the country by pretending to make an¬ 
other, by passing a law that at no future time shall the 
outstanding circulation of legal tender notes exceed $3S2- 
000,000. They might just as well have called it $482,- 
000,000 or $1 482,000,000, it would have meant just as 
much. When a man has established a reputation for 
breaking his promise, it makes very little difference 
what he promises, and, if it serves his purposes he may 
as well go in for big figures. 

We have started now upon the inflation course. The 
expansionists will do their best to diffuse their ideas 
among the people, and will especially among the ignor¬ 
ant classes, make many converts to the doctrine that 
whatever Congress chooses to call money is money, 
and that the way to bring about prosperity and good 
times generally is to put the presses at work, and turn 
out new reams of lies on paper. Should there be a re¬ 
vival of trade this summer, as there doubtless will be, 


owing to the movements of the crops, and a consequent 
stir in the money markets of the whole country involv¬ 
ing the shipment of goods, both imported and of home 
manufacture, to the West, in payment for the produce 
of the prairies, it will be pointed to as a proof of the 
beneficial effects of inflation, and the argument will be 
that if a limited addition to the volume of the currency 
produces good results, a larger must produce better,and 
no effort will be spared, both to make the present Con¬ 
gress, which begins it second session in December, 
more strongly inflationist in its tendencies than ever, 
and to secure, at the fall elections, the return of men 
who will carry out the same ideas in the Congress which 
comes into life in March next. * 

For a time, at least, the President is with the inflation 
party. But a few days ago he was looked upon as the 
head and front, the main hope and sure reliance of the 
hard-money men. Where he will be next fall,no man can 
say. It has been proved that his financial views lack 
the quality of permanence, an essential element in states¬ 
manship. Under all these adverse circumstances, with 
Congress, as a whole, ignorant, corrupt, and utterly in¬ 
efficient, with a President whose position is uncertain, 
and with a people who have been debauched by twelve 
years of paper currency and constant inflation, there is 
but one thing to be done. The people must be educated, 
and the men who really and truly desire to see a return 
to specie payment must organize against the curse of 
paper currency as men organized against the curse of 
slavery, and the weapons of their crusade must be used 
outside of politics, in the press and upon the platform. 


Spirit of the Press. 

[Indianapolis Journal.J 

The Journal has favored an increase of the currency, 
but never an unlimited increase, and lias constantly 
maintained that our currency must eventually be 
brought to par with specie and made convertible into 
gold. We believe that the currency of the country 
should be adequate to the wants and necessities of bus¬ 
iness, and that it is impossible for Congress or any 
other human power to prescribe its limits, or to say 
just how much currency the country ought to have, or 
can profitably use. Free national banking will give us 
all the currency we need, and of the very best kind. 
It will give us an elastic currency, adjustable to the 
business wants of the country, because just as long as 
there is such a demand for currency as to make banking 
profitable, just so long men will engage in it, and no 
longer. And best of all, free banking will remove the 
monopoly from the national banking business, and ena- 
able all who wish to'engage in it under the restrictions 
provided by law, to do so. The monopoly feature of 
that system is justly odious. It never ought to have 
been created and should be removed at the earliest 
practicable moment. 

[Cincinnati Enquirer.] 

The friends of expansion in Congress have made a 
mistake. They have accepted a compromise on the 
currency question which must be regarded in the light 
of a defeat. Compromise at best is a detestable word; 
and most compromises are either dishonorable or un¬ 
just; but when a powerful majority, which is in the 
right, and holds the future securely in its grasp, meets 
more than half way a weakening minority, which is in 
the wrong, in order to effect a compromise, the thing 
becomes doubly pernicious. This impolitic and un¬ 
timely course was adopted by the friends of an increase 
of currency. It hinders, rather than facilitates, our 
future success; for our leverage is shortened by the al¬ 
most unanimous support which the expansionists gave 
to the measure. This is the hour of the triumph of 
Money’s candidate for the Presidency. 

[Cincinnati Gazette.] 

As Senator Thurman said, the bill has very little 
evil in it. Its chief significance, however, is in what it 
does not contain rather than in what it provides. Every 
proposition looking to a contraction of the currency or 
fixing a time for the resumption of specie payment is 
omitted. These questions, as Senator Sherman re¬ 
marked, have been postponed, and he might have added 
indefinitely. This was really the greatest victory for 
the inflationists. Free banking would not have inflated 
under a provision naming a time for resumption, even 
had that time been four years hence, nor would the 
business of the country have rested easy under such a 
warning. 

[Baltimore American.] 

The fact that the bill was voted for in either House 
of Congress by men representing the extremes of opin¬ 
ion on the subject of the currency is the best evidence 
of its indecisive character. The one point in it that 
may be safely approved is that it fixes the limit of the 


































70 


THE FINANCIAL BECORD. 


legal tender issue, and does away with the dangerous 
and unsafe idea of a treasury reserve to be issued 
whenever the exigencies or the feare of the financial 
world might demand expansion, and withdrawn at the 
discretion of the Secretary of the Treasury. It is true 
that in doing this it liberates $26,000,000 of the reserve, 
and to that extent may be regarded as a measure of 
inflation, but as this amount is now in circulation and 
has been treated by our Treasury administration as a 
part of the legitimate currency of the country, the in¬ 
crease is more theoretical than real. 

[Chicago Tribune.] 

Not long since a Western member of Congress, rep¬ 
resenting a rural district, made inquiries by letter of 
each Natioral Bank and each private bank in his dis¬ 
trict (about a dozen in number), to learn how much of 
the new currency would be wanted by his constituents 
in case the redistribution bill should pass. The an¬ 
swers he received were that two or three of the Na¬ 
tional Banks would like to surrender their circulation, 
one National Bank would like to have an increase, and 
one or two of the private banks would like to become 
National Banks. The net result of the canvass was 
that not a dollar of new circulation would have been 
taken by the district in the aggregate, although there 
would have been a trifling change in the local distribu¬ 
tion of the amount they now have. We know that 
some of the National Banks in this city are retiring 
their circulation as fast as they can collect it in, while 
others are only restrained from doing so by the express 
desire of the Comptroller of the Currency that they 
shall retain it. 

[Dubuque Times.] 

The Illinois platform declares that “as a consequence 
of the late civil war about $382,000,000 non interest 
bearing notes were issued to, and are now held by, the 
people as a safe and convenient currency." The very 
opening words of this resolution—“as a consequence” 
—are evidently explanatory and apologetic of the fact 
that any legal tender notes are in circulation. The 
greenback notes are characterized as ‘‘safe and conven¬ 
ient.” The national bank circulation is declared “the 
best ever before offered to the people.” As the former 
were in circulation “before” the latter, we take it that 
the case is made out, iu both form of expression and 
significance of the terms used. Still further declaring 
“in favor of the return to specie payment at the earli¬ 
est practicable day,” is “confirmation strong as proofs 
of holy writ” that the Illinois Republicans would never 
advise, as they surely did not, an increase to the 
amount of one dollar of greenback currency. 

[N. T. Evening Post.] 

The “reserve” has been used when not needed, and 
withheld when needed, through the fault of the Presi¬ 
dent in surrounding himself with inexpert advisers in 
finance. Had they been experts then whenever the 
“reserve” was used corrupt motives would have been 
charged. It is only the general conviction of their 
ignorance that has saved them from such a charge. 
The enormous power to issue and withdraw $44,000,- 
000 of lawful money is now held in abeyance by a 
legislative concession of the $26,000,000, until the coun¬ 
try can be educated up to the standard of contraction, 
and until a Congress can be elected which will reflect 
that advanced intelligence, when there is reason to be¬ 
lieve that not merely will these $26,000,000 he with¬ 
drawn, but more also will be withdrawn, and at the 
Bame time enough gold will be accumulated for the 
United States Treasury to announce that it is prepared 
to pay its notes in specie. Meanwhile we are saved, 
to some extent, from financial chills and fever. 

[Cincinnati Commercial.] 

There is less mischief in the measure worried through 
Congress than we expected to find in any legislation, 
touching the finances, by that most flatulent and stu¬ 
pid body ; and yet to have done nothing would have 
been a great improvement over that which has been 
done. It is the assurance that Congress is about to 
adjourn that helps the people. The Richardson “re¬ 
serve” is no more, and if there is an encouragement of 
unsound banking in the abolition of the currency re¬ 
serve, it is some comfort to know that the paper mills 
are not at work to grind out currency. The specula 
tors in politics who have been toiling to set up a new 
party in the South and West, professing to demand 
popular relief, but meaning repudiation, are badly 
beaten. 

[Philadelphia Ledger.] 

There are some countervailing provisions in the act 
—points looking to contraction—but, on the whole, 
the measure is one of inflation, though mitigated in¬ 
flation. The one great violation of principle which 
no mitigating conditions can offset, is the assumption 
that Congress may in time of peace declare a paper 
promise a legal tender for existing debts. We have 
always held that no such power is possessed by Con¬ 
gress, even in time of war. The only ground taken 
by the Supreme Court, at its rehearing of this question, 
wa3 that the legal tenders were only justified as a war 
measure necessary to carry on military operations for 
the support of the Government. On this extreme plea 
there can be no legal justification of the recent issue of 
twenty-six million doilars. This is not a time of war, 
and there is no pretence of necessity which might not 


be urged every day of the year, under any and all 
circumstances. Therefore, this further step is entirely 
in the wrong direction, and an unwarrantable surren¬ 
der to Congress. 

[Jacksonville (Ill) Journal.] 

The assertion sometimes made that the people of the 
West are nearly unanimous in favoring an increase of 
legal tender notes was sufficiently refuted in the Repub¬ 
lican State convention of Illinois. The vote striking 
out a resolution opposing any increase of such notes, 
and favoring their gradual retirement, was carried by 
only 64 majority in a vote of 532, the number favoring 
the resolution being 234. This is hopeful. 

[St. Louis Republican.] 

It neither inflates nor contracts the volume of curren¬ 
cy ; it leaves it as it is. It is a mere placebo given to 
the country to quiet their anxiety on the subject o‘ the 
finances. The bill is called a compromise measure ; 
this means that as Congress and the President cannot 
agree on a remedy for the existing suspense, they wtll 
pass a law to do nothing—which, by the way, would 
have been as effectually done without the law. 

[Minneapolis Tribune.] 

The Currency bill at last assumed the form of the 
redistribution of the currency already out, all al'usions 
to free-banking, expansion and contraction, being omit¬ 
ted. It proposes to buy $55,000,000 from the East and 
sell it to the West on the same terms; and this naked 
proposition seems to have the approval of most of the 
members from all sections. But, either wisely or un¬ 
wisely, the bill is ridden by a provision to reduce the 
bank reserves, and to release the surplus into circulation, 
which, will have the immediate effect of inflation to 
the amount of the surplus. 

[Philadelphia Press.] 

Half-way measure as it is, the new law contains some 
excellent features and avoids some very bad ones. We 
could not have expected anything half so favorable to 
the producers of the country from such a chaos of con 
Hiding opinions as the three branches of the national 
law-making power have for some time constituted. 
The whole effect of the law should be decidedly favor¬ 
able to every form of business activity except stock 
and gold gambling, and we fully believe that it will be. 
There is already increased activby in the stock markets, 
and everything w ears a more cheerful aspect. It is 
very much that we have escaped an attempt to force 
specie payments before their time, and that the Treas¬ 
ury Department can no longer play fast and loose with 
the currency. 

[Chicago Times.] 

A change of programme was the first consequence 
of that secret conference among the repudiationists in 
the rooms of Mr. O. P. Morton at the Ebbitt house. 
The new programme was that the repudiationist Repub¬ 
licans should refrain from precipitating an open breach 
with Grant, whose characteristic tenacity of purpose 
would only be strengthened by such a course, and 
which course, beside, would place the repudiationists 
in the disadvantageous attitude of being the initiators 
of the party schism ; that, instead of assuming the ag 
gressive, they should maintain their front and seek 
to appear only as acting on the defensive; to which 
end they should look to the approaching party conven¬ 
tions, and “take good care to secure from their consti¬ 
tuents a ‘spontaneous indorsement’ of their position.” 
Thus, if the President persisted, they would shift from 
their shoulders to his the responsibility of “dividing 
the party.” This new programme of the repu l iation- 
ist Republicans, secretly concocted in the city of Wash¬ 
ington, was carried out in letter and in spirit, by the 
Republican party conventions of Illinois and Indiana. 

[N\ Y. Bulletin.] 

The transfer of $55,000,000 of bank circulation from 
the East to the West may have been well enough as a 
political sop to satisfy the West, hut it is not likely to 
prove of much consequence as a financial expedient. If 
carried out it would be a transfer of the privilege of 
issuing notes without an actual transfer of circulation ; 
for .the West would have to purchase of the East the 
bonds required as security against the notes it pro¬ 
cured, and to an amount about 25 per cent, (in market 
value) in excess of the circulation secured. The trans¬ 
fer would amount to about this; the Eastern banks 
would sell their bonds to the West, at about 115 cents 
on the dollar, and the West would receive notes to the 
extent of 90 cents on the dollar; so the operation would 
increase, at least temporarily, the amount of currency 
at the East and diminish it at the West. Iu other 
words, the West would have to advance about $70,- 
000,000 to procure its $55,000,000 of bank notes. If 
that section should find it convenient and to its inter¬ 
est to make such an exchange, the Eastern banks wmuld 
have their loaning power thereby largely increased. 

[St. Louis Democrat.] 

The repudiationists who clamor for unlimited green¬ 
backs, and the Republicans who declare for unlimited 
bank notes, will both be opposed by men who do not 
want the more costly bank-notes substituted for the 
cheaper legal-tenders, and yet do not want repudiation, 
or any steps toward it. He who will propose a defi¬ 
nite plan, so simple that the people can understand it, 
for providing a currency elastic enough to meet the 
wants of the West, so well anchored in value as not to 


run any risk of depreciation, but rather to approach 
gradually toward the specie basis, and yet involving no 
increase, but rather a decrease, of the more costly bank¬ 
note cunency, will be likely to find a very great num¬ 
ber of followers and supporters at the West. 

[Memphis Avalanche.] 

This law, while it does not in terms increase the vol¬ 
ume of paper money in the country, expands the cur¬ 
rency by repealing all provisions for reserves, except¬ 
ing a five per cent, reserve in the Treasury of the Unit¬ 
ed States. Whatever opinions may he entertained of 
the intrinsic merits of this law as a measure of public 
policy, its passage will be hailed with satisfaction by 
large numbers of business men, as being the termina¬ 
tion of that feverish uncertainty which pervaded all 
our business circles while the policy of Congress re¬ 
mained undetermined. During the session of Congress 
just closed, the debates in both Houses revealed the 
fact that our rulers had no financial policy, excepting 
that which the National Banks and their friends might 
dictate, and no political economist could acknowledge 
that this merited recognition as a national policy. 

[Omaha Herald.] 

The Democrats of Nebraska will avow their princi¬ 
ples whenever they meet in convention without the 
least reserve or ambiguity. They will resolve for the 
maintainance of local self-government against Federal 
encroachment, — Home Rule — for Hard Money, for 
Tariff for Revenue, in opposition to a tariff for Protec¬ 
tion, and against all attempts to regulate the social 
habits of the people by law under whatever plea they 
may be made. 


Senator Loffan’s Springfield Speech. 

Mr. Logan seems to have labored under the illusion 
that some people in the country want to abolish all 
currency—to cancel the greenbacks and give nothing 
in their stead, what else can he mean when he says : 
“The cancellation of greenbacks meant wiping out the 
only currency with which debts might be paid, and 
the business of the country carried on ?” And, as if 
any one ever pretended that it were possible to do away 
with our present currency before we were ready with 
something better to take its place, he adds : “Until 
the country is able to discharge its obligations in hard 
money, it would be wrong to deprive the people of the 
only medium of exchange they possess.” It is evident 
from this that Cimmerian night reigns in the mind of 
the learned Senator on the currency question. He 
don’t give up the greenback currency, because then we 
would have no money at all ! And what a crushing 
argument against the resumption of specie payments 
is this : “There is hot gold and silver enough in the 
pockets of the whole Convention to pay one man’s 
taxes.” 

There is abundant evidence throughout the speech 
of the Senator’s dread of being considered a repudiator. 
He would not repeal the Legal-Tender act, because 
that would he a repudiation of the contract between 
the bill-holder and the Government! In other words, 
when the Government says it will enable A to pay B 
in depreciated paper, Mr. Logan insists it shall continue 
to do so, for not to do it wmuld be to repudiate its con¬ 
tract with A ; all of which speaks volumes for the ten¬ 
derness of the Senator’s conscience. Mr. Logan insist¬ 
ed he was not an inflationist; yet he would give the 
country about $250,000,000 more currency in order 
that it might have a quantity of currency proportion¬ 
ate to its magnitude, for he says that the United States 
has not tifco-thirds the amount of currency in propor 
tion to its wealth and magnitude of any other civilized 
country. Immediately after this, with most remarka¬ 
ble logic, he adds that he does not know that there is 
not money enough in the country ; that whether there 
is or not must be determined by business ! Pity he did 
not act on this principle all through the winter, when, 
instead of allowing business to determine the quantity 
of currency the country needed, he was endeavoring to 
determine it himself. And as if this were not contra¬ 
diction enough, after promising that he would not say 
there was not money enough, he violates his promise 
and quotes “from the President” to show the country 
had not money enough. The paialysis of industry de¬ 
monstrated there was not sufficient money in the coun¬ 
try ! 

As he could say that there was, and was not, money 
enough in the country, and that the demands of busi¬ 
ness should, and should not, regulate the volume, so 
Mr. Logan both opposed and favored specie payments 
in one and the same breath. “He was not opposed to 
specie payments still he “believed in greenback cir¬ 
culation to carry on the business of the country.” He 
agreed that “when the Government had the ability to 
resume it should resume;” but assured the Conven¬ 
tion that when the time would co'me no one knew or 
would know, for “neither he nor any one else could say 
when they could resume and keep paying in specie.” 
Thus it seems that Mr. Logan is not opposed to specie 
resumption and that he is opposed to it; that he likes 
the greenbacks and lie does not like them ; that he does 
not know whether the country has money enough or 
not, and at the same time is sure that it wants more; 
















THE FINANCIAL RECORD. 


71 


and that there is a stagnation ot industry because there 
is not money enough in the land ; and..that we ought 
to have one-third more currency than we have, that is 
$250,000,000 more or thereabouts; that business itself, 
and not Congress, should regulate the volume of the 
circulating medium, and also that Congress, and not 
business, should do the same, that he is not an infla¬ 
tionist, but wants more currency; that the Govern 
ment must resume specie payments when able to do 
so, but that no one can tell when that time will come; 
that the time will not come till we commence selling 
more than we buy, and nobody knows when that will 
be,—to believe all of which requires a mental constitu¬ 
tion so unlike that of a sane or sober man that we are 
in doubt what category to place our John in while he 
was propounding this string of paradoxes.— Chicago Tri¬ 
bune. 


The Inflationist’s Column. 

[From the Atkinson, (Kan.) Patriot, (Granger.)] 

THE GOLD BASIS HUMBUG. 

Banking on a specie basis has been tried in all civil 
ized countries under the sun, and every system of gov¬ 
ernment. For four hundred years financial men have 
tried to increase the wealth of the country by the issue 
of paper money based on gold and silver. It lias -run 
well for a while, but the system has inevitably brought 
ruin and disaster in its train. At periodic times the gold 
basis turns out to be a fraud. Banks that issue two to 
five dollars in paper for every dollar of capital, have 
never been able to redeem in gold, and consequently 
holders of their notes have suffered. The gold and 
silver in the country is not sufficient for its business. 
This is admitted by all. A different currency is indis- 
pensible. This currency must be based on something 
tangible. History shows that a currency based on 
specie always entails loss and disaster The faith and 
resources of the government present a tangible and un¬ 
impeachable basis. 

[From the Inter-Ocean, (Wildcat.)] 

THE IOWA ANTI-MONOPOLISTS. 

The resolution regarding the currency, adopted by 
the Iowa Anti-Monopoly Convention, is a curiosity in 
its way. It displays more abject cowardice than we 
thought it possible for any body of men to entertain ; 
while the absolute ignorance shown of the history and 
the present situation of the country is astounding. Let 
us take it in pieces. The first part reads as follows : 

That the faith and credit of the nation must be maintained in¬ 
violate; that the public debt, of whatever kind, should be paid 
in strict accordance with the law under which it was contract¬ 
ed. 

Either this language is a trick of some pronounced 
Pendletonian repudiationist, or else the convention 
deserve a leather medal for being the most guileless, 
innocent and childlike body of politicians in Christen¬ 
dom. That the majority thought themselves pronounc¬ 
ing strongly against repudiation, however, is evident 
from the contex. What some of these innocent souls 
may think when they discover that they have adopted 
almost the precise language of every repudiation plat¬ 
form that has been formed, we shall not attempt to 
say. The National Republican Convention of 1872 
found it necessary to adopt the following : “National 
honor requires the payment of the public indebtedness 
in the uttermost good faith to all creditors at home 
and abroad, not only according to the letter but the spirit of 
the laws under which it was contracted. 

The Iowa convention, however, propose to pay it in 
“strict accordance with the law which repudia'ion 
ists everywhere contend, means, in greenbacks, or 
whatever may at the time be the lawful money of the 
country. In view of this, the next paragraph sounds 
strangely enough: 

That an overissue of paper money, being at variance with the 
principles of a sound financial policy, ihe circulating medium 
should be based upon its redemption in specie at the earliest 
practicable day. 

We do not know, to be sure, what the Iowa Inde¬ 
pendents regard as “an overissue of paper money;” 
but it strikes us, that when the six or seven hundred 
millions of bonds, which are not by their terms made 
payable in coin, shall be paid in “strict accordance 
with the law,’’ there may possibly be what might rea¬ 
sonably be called an “over issue of paper money.” But 
immediately after follows a demand that this issue 
shall “be convertible into specie at the will of the hold¬ 
er.” This is followed immediately by a demand that 
“the volume of the currency shall at all times be ade¬ 
quate to the general business and commerce of the 
country,and be equitably distributed among the several 
States.” Now, when any greenback is exchangeable, 
dollar for dollar in gold, how are they going to make 
tlie volume of the currency any more adequate to the 
wants of business than the amount of specie will allow 7 
It is not what the necessity of the country demands, 
but what the coin in our vaults permits, that must gov¬ 
ern the quantity of currency in existence. Do the 
wise men who framed this plank know what the amount 
of specie in the country is and what it has been? It is 
presumed they do net, or they never would have given 
utterance to such a supremely ridiculous idea. 


[From the “Field, Turf and Farm.’’] 

A SUM IN ARITHMETIC. 

Should national bank notes be substituted for the 
greenbacks now existing, then the banks would receive 
about forty-five millions of gold annually, jvhicli in the 
end would amount to over nine thousand millions of 
dollars paid to the banks for polluting the currency 
with their inferior paper. How any member of Con¬ 
gress can reconcile it to his conscience to rob the peo¬ 
ple of this enormous sum for the benefit of the banks 
is inconceivable, in the face of the notorious fact that 
there are parties enough willing and ready to take the 
place of the national banks and save to the Treasury 
this amount, (five times that of the public debt,) which 
by being reserved will, of itself, as a sinking fund pay 
off the national debt in comparatively a very few years. 
Let the granges, let all productive industries, let all 
taxpayers ponder over these serious, these alarming 
facts. 


Gleanings. 

The President’s promotion of Mr. Buford Wilson from 
the station of U. S. district attorney for the South Illi¬ 
nois district to that of solicitor of the treasury, vice Ban- 
field, is a political act which may be regarded as pos¬ 
sessing some significance from this fact. Mr. Wilson is 
one of the very few Republican officeholders in Illinois 
who ve radically opposed to repuditation; who hold 
that it is not competent for the federal government, in 
time of peace, to make use of the war power to make 
or maintain a forced loan ; who, in a word, believe in 
Real Money and not in Bogus Money. 

Gold yesterday reached 111; so the greenback dol¬ 
lar is worth 90 cents. May it never be worth less.— 
Jacksonville, (III.,) Journal. 

It never has been “worthless,” even when gold was 
at its highest.— Springfield, (III.,) Journal. 

No, not quite; but it dropped to 35 cents, and if 
some wild inflationists had their way, it would go 
tumbling that way again.— Jacksonville Journal. 


The Present Condition of the Banks. 


The Comptroller of the currency at Washington has 
called on the 1980 national banks in the country for a 
statement of their condition on the 26th of June. The 
last statement (May 1.) showed an aggregate of gov¬ 
ernment bonds to secure circulation of $389,248,900. 
and $14,890,200 in bonds to secure deposits. The out¬ 
standing circulation was $340,088,640. Other facts 
will appear from these comments of the New York 
Financial Bulletin : 

The statement of May 1, shows progress of improve¬ 
ment in the condition of the banks, in nearly every as¬ 
pect, within the twelve months during which the panic 
occurred. The number of banks was increased from 
1962 to 1978, and their capital from $487,894,251 to 
$490,077,101. The best evidence that the banks have 
not sustained any important losses is afforded by the 
following statement of the amount of the “surplus fund” 
at the period nearest to May 1 for the last four years :— 

May 1.1874.$125,561,081 Increase.$ 9,705,507 

April 25, 1878. 115.805.574 Increase. 11,493,049 

April 19, 1872. 104.312,525 Increase. 6,692,426 

April 29, 1871. 97,620,099 

The amount of national bank notes outstanding was 
increased only $1,924 785 during the year, the amount 
on May 1 being $13,911,351 below the sum authorized 
by law, which does not show a very great desire on the 
part of banks in circulation—a fact that may be ac 
counted for by the depression of business consequent 
to the panic. In the “individual deposits” there was 
an increase from $616,800,000 to $649,300,000 ; while 
the loans and discounts stood only $11,200,600 higher. 
This ratio of increase is not equal to what occurred in 
the preceding years, as will be seen from the following 
comparison: 

LOANS AND DISCOUNTS. 

May 1,1874.$919,258,917 April 19. 1872.$841,069,411 

April 2, 1873 . 908,071,471 April 29, 1871.'776,003,591 

The condition of the reserves is in very striking con¬ 
trast to that existing a year previous, as will appear 
from the following analysis of the reserves of each of 
the three classes of banks : 


CLASS I.—COUNTRY BANKS. 

May 1. 1874. 


Com position of reserve: 
)ue from redeeming ageni 
Specie. 


Three per cent, certificates. 



1732 

$ 77,801,463 

$ 77,281,146 

112,637,640 

105,686,322 

, 31,S36,177 

27,405,176 

, 60,112,230 

59,011,321 

2.431.605 

1,567.149 

47,613.805 

43,202,852 

. 2,480,000 

1,895,000 


10,000 


CITIES OTHER 

THAN NEW 


179 

.$70,841,156 

$67,520,752 

. 83,358,765 

71,831,606 

. 12,417,609 

4,310,763 

. 33,669,031 

29,771,577 

.. 4,211,157 

1,762,475 


32,627,464 

,. 11,515,00 

7,000.000 

670,000 

CITY BANKS. 



49 

,$58,710,526 

$47,890,039 

. 69,971,986 

47,286,772 

. 11,221,457 



603,267 

$23,642,564 

$13,088,251 

, 20,199,021 

24,023,521 

. 26,130,000 

9,475,000 


700,000 


YORK. 

Number of banks.177 

Reserve required.$70,841,156 

Reserve held. 83,358,766 

Excess over legal reserve. 12,417,609 

Composition of reserve: 

Due from redeeming agents. 33,669,031 

Specie. 4,211,157 

Legal tenders. 33,803,577 

U. S. certificates of deposit. 11,515,00 

Clearing-house deposits. 

CLASS III.—NEW Yi 

Number of banks.48 

Restrve required.$58,710,526 

Reserve held. 69,971,986 

Excess over legal reserve. 11,221,457 

Deficiency of reserve. 

Composition of reserve: 

Specie. $23,642,564 

Legal tenders. 20,199,021 

United States certificates of deposit. 

Clearing-house certificates. 

The country banks held 6.7 per cent., or $34,836,177 
above the legal requirements; the banks of the re¬ 
demption cities (exclusive of New York) had an excess 
of 4.4 per cent., or $12 417,609; and the New York city 
banks 4.8 per cent., or $11,261,457, while at the same 
time last year the New York banks showed a deficiency 
in reserve of $603,267. The amount of legal tenders 
and legal tender certificates held by the New York 
banks was $46,300,000 against $34,000,000 a year pre¬ 
vious, and the specie was $10,600,000 higher. 

The remarkably strong position of the reserves ac¬ 
counts for the prevailing extreme ease in money ; and 
the like condition of the country and redemption banks 
suggests a probability that the deposits of both these 
classes of banks in this city will not be drawn upon so 
largely as usual during the approaching crop movement, 
with probably a continuation of comparative ease at 
this centre through the fall; and the more so as the 
changes in the reserve laws now going into operation 
will further augment by some millions the surplus be¬ 
yond the legal requirements. 

The banks have already begun to surrender their 
circulation and take up their bonds, the Commercial 
of Chicago having on the 30th ult. deposited $360,000 
of their bills, and taken up $400,000 in bonds. The 
Boston Advertiser says that many of the national banka 
are likely to take advantage of the new currency bill 
to withdraw their circulation, and to get possession 
again of their bonds, largely above par as they are. 
National banking is no longer paying so well as form¬ 
erly, and there are many bank proprietors who will 
prefer to take their bonds and use them in some more 
independent way. The only conditions are that bonds 
shall be withdrawn in sums of not less than $9000, and 
that the amount of bonds on deposit for circulation 
shall not be reduced below $50,000. The Philadelphia 
Ledger says: 

The ruling high price of bonds is probably the ex¬ 
planation of such a course being adopted by the banks, 
they preferring to realize at the present rather than to be 
subjected to the increasing inconvenience of maintaining 
and redeeming their circulation. Should this course 
be very extensively adopted doubt as to the character 
of the law will resolve itself into a certainty that it is, 
after all, a measure of contraction. 


The New York Tribun\e 6ays: 

Opinion strengthens that we are to have a materially 
reduced amount of paper circulation; that some of 
the larger banks from choice, and many of the smaller 
ones from necessity, will call in their issues and sell the 
collateral bonds. The banks in the larger cities will 
thus avoid many annoyances, and in a reasonable 
time so contract the aggregate of loanable funds 
as to enable them to earn a fair interest on their capi¬ 
tal. For some months. 2 and 3 per cent, has been the 
rate in this city for call loans, a state of things which 
the banks cannot and do not mean to tolerate much 
longer. Hence, as we learn, two of our city banks, 
the Third National and the American Exchange, have 
decided to withdraw their circulation, amounting to 
$1,500,000. If others fol ow their example we shall 
soon be on the high road to specie payments. The 
small country banks have heretofore found a more 
profitable use for their loanable funds than have our 
city banks, having been able to earn fair rates of in¬ 
terest, and so long as their circulation remained out 
their business was pleasant and profitable, but the new 
system of redemption will give rise to a regular and 
constant assorting of notes, compelling the banks at 
once to call in money in order to be prepared for any 
demand that can be made upon them from this new 
and, heretofore, unexpected source. We know, of no 
useful business interest that can be affected otherwise 
than favorably by the prospect held out by the changed 
condition of things. It is a sure road to specie pay¬ 
ment, will compel a conservative course by our money¬ 
ed institutions, and give strength, solid'ty and certainty 
to all the important operations of trade. If it shall at 
the same time diminish speculation and bring inflated 
values down to a specie standard, only those pursuits 
which thrive by inflation and fictitious values can be 
injuriously affected. 























































^nmkatt ^xrtial ^swriatian, 

5 Pemberton Square, Room 21. 

Boston, July 2, 1874. 


SPECIAL ANNOUNCEMENT. 


The Sixth Number of the Journal of Social Science, published by Hurd & Houghton, Riverside Press, Cambridge, and No. 3 Astor Place, New 
York, will contain a brief report of the General Meeting at New York, with nearly half the papers read there printed in full. Among the papers in 
this number will be, 

The Address of the President.of the Association, George William Curtis, Esq., of New York. 

The Report of the Secretary, F. B. Sanborn, of Concord, Mass., on The Work of Social Science in the United States. 

The Paper of G. Bradford, Esq., of Boston, on Financial Administration; that of David A. Wells, Esq., of Norwich, Conn., on Rational 
Principles of Taxation; that of Willard C. Flagg, Esq., of Moro, Ill., on The Farmers’ Movement in the Western States; that of Z. R. Brock¬ 
way, Esq., of Detroit, on The Reformation of Prisoners; that of Dr. E. M. Gallaudet, of Washington, on The National Deaf-Mute College, and that of 
George T. Angell, Esq., of Boston, on The Protection of Animals. 

There will also be included in this number the full proceedings of the Conference of Boards of Charities, with the papers read thereat, and 
the report of the Department of Social Economy on Pauperism in New York, with the remarks of Dr. John Hall, Dr. Bishop and others concern¬ 
ing it. If possible, the long paper of President White, of Cornell University, on The Relation of the State and National Governments to Advanced Edu¬ 
cation, will be added, with the remarks of President McCosh, of Princeton, thereon. Subscriptions to the Journal will be received either by the 
publishers or by the Secretary of the Association. The number will contain 200 pages and will be sold for One Dollar. Previous numbers of the 
Journal of Social Science can be obtained of Messrs. Hurd & Houghton, at $1.50 each. 

The rest of the papers read at New York will be printed in the Seventh number, to be issued in September, and among these will be Dr. Wool- 
sey’s Paper on International Law, the papers on Sanitary Subjects, and the Financial Discussion. The Sixth number will be issued about July 20, 
and the Seventh number in the latter part of September. A list of the officers and members of the Association will appear in connection with the Re¬ 
port of the New York meeting. 

GEORGE WILLIAM CURTIS, President, 

F. B. SANBORN, Secretary. 


FINANCIAL RECORD. 

“WE NEED ONE THING BESIDES MORE MONET, AND THAT IS BETTER MONEY .”—Senator Zacli. Chandler. 


VOL. I. 


FRIDAY, JULY 10, 1874. 


NO. 


The Financial Record will be continued until further no¬ 
tice. and will be sent free of postage, to all persons who will re¬ 
mit, 50 cents to the publishers. All editors who receive it are 
invited to send their papers in exchange. It will be no longer 
published by the American Social Science Association, 
but for the present, as heretofore, communications respecting it 
may be addfes-ed to the Secretary of the Association, F. B. San¬ 
born, No. 5 Pemberton Square, (Room 21,) Boston; and all ex¬ 
change palters, public documents, etc., maybe forwarded to the 
same address. 


Financial Events and Possibilities. 

The most important event affecting the currency, 
during the past week, has been the withdrawal of cir¬ 
culation by one or two of the New York and Chicago 
banks. One Chicago bank (the Commercial) lias gone 
to the full extent allowed by the law, and has left with 
the treasury but little more than $50 000 in bonds. It 
is too early yet to say whether this step will be gen¬ 
erally followed. Much depends upon whether the new 
system of redemption is effective or not. If the bills 
of national banks should be sent in rapidly, the re¬ 
quirement to keep five percent, of the circulation in the 
treasury would be greatly embarrassing to the banks. 
If, on the other hand, they should not be offered in 
large quantities, there would be small inducement for 
banks to surrender their right of circulation. 

It is worthy of notice in this connection that while 
western conventions are demanding the repeal of the 
national bank act, and the issue of currency direct from 
the treasury, in order that the country may get the 
profit of circulation, the new currency law, for which 
the western members, with hardly an exception, voted, 
increases directly the profits which national banks de¬ 
rive from their circulation, provided they can lend it 
and keep it out. The withdrawal of bonds and sur¬ 
render of circulation by certain of the banks must be 
attributed to causes other than the reserve sections of 
the new law, and in spite of them. Thus far the mov e¬ 
ments of the withdrawing banks seem due to fears 
which events have not yet justified, and to the high 
price of bonds. 

The first weekly statement of the New York banks since 
the currency act went into effect, made up to the 3d inst., 
is very instructive. The statement is one of largely in¬ 
creased averages, with a single exception. Deposits 
and loans both show a very large gain, indicating the 
revival of business. An increase of $3,000,000 in spe¬ 
cie and legal tender bills, indicates how plenty money 
is. And the decrease of circulation illlustrates the ten¬ 
dency to surrender the privilege of issue, of which we 
have already spoken. The fact that the lessened 
amount of reserve required has not been followed by 
an actual decrease, but on the other hand by an in¬ 
crease of millions, making the amount now held, above 
the requirements, over $25,000,000, proves little or noth¬ 
ing just now. Money being in ample supply and busi¬ 
ness not yet having acquired its old activity, the banks 
are forced to keep unemployed this enormous sum of 
money. We must wait for the stringency which al¬ 
ways comes, whatever the volume of the currency, to 
ascertain whether the banks will avail themselves of 
a privilege that certainly brings the security of their 
liabilities down beyond the point where danger begins. 

Business has experienced a very sensible revival, at 
least in the great centers of commerce, and everything 
nowpoints to an active fall trade. A comparison of prices 
will be advantageous by-and-bye. As compared with 
two or three months ago, gold is low, but stocks and 
some articles of production are high. In other words 
the increase of currency now become permanent has 
inflated greenback prices. The greenback price of corn 
and wheat and whatever else we may sell abroad, will 
be affected only as gold goes up and down. It is easy 
to see how even the inflation that has taken place will 
render it harder for the farmer to pay for what he 
must buy, with what he has to sell. 

The call of the Secretary of the Treasury for bids for 


the remaining $1711,000,000 of new fives, is a notable | 
event. The bids are not to be opened until'the 23d 
inst,., and till then we shall know nothing of the success 
of the Secretary in placing the loan. The manner in 
which the offer is to be made has been criticized, but 
it is precisely the course that is followed whenever the 
Treasury sells gold or buys bonds, and the objections 
to this call for proposals will apply equally to other 
Treasury transactions. It is evident that advantage 
ought to be taken of the fact that new fives are above par 
in gold. If the whole $179,000 000 could be sold at 102, 
which is below the present market price, the proceids 
would redeem $181,580,000 of five-twenties. Thus not 
only would the public debt be absolutely decreased by 
the sum of $2,580,000, but the annual interest saving 
would be nearly two millions mere. It is not at all 
likely that so large a premium will be realized ; but it 
would seem to be certain that the tvhole loan can be 
disposed of above par, and to whatever extent it is so 
disposed of, five twenties may be redeemed, and one 
per cens. of the whole amount refunded will be saved 
in interest each year. 

Tlie Proof of the Pudding. 

As the effects of the new currency law can best be 
seen by looking at them, and as the men of business, 
financial editors, and professional politicians, are now 
busy looking at them closely, all over the country, we 
give this week some testimony from various quarters, 
as to what these sharp observers see. The Richmond 
(Va.) Journal says: 

It is too early to speak positively as to the effect of 
the new currency bill upon the monetary affairs of the 
country, but the premonitions are decidedly confirma¬ 
tory of the opinion expressed, when the action of the 
President approving the present currency bill, after 
vetoing its predecessor, was criticized—that the bill, 
now a law, is a very conservative measure, and may 
probably cause a reduction in the amount of Nation¬ 
al Bank notes issued, instead of keeping it at the max¬ 
imum, $382,000,000. The Third National Bank of 
New York proposes to reduce its circulating notes from 
$800,000 to $50,000, and withdrawn $720,000 in bonds. 
The American Exchange Bank of New York withdraws 
$706,000 in bonds, and will, pro rata, reduce its circula 
tion, while it is certain that other banks will pursue the 
same course, as it is more profitable to release the 
bonds, worth 16 and 17 per cent premium, than use the 
currency they are deposited to secure, which is issued 
only in the proportion of $9,000, currency for $10,000 in 
bonds. Two Chicago banks which proposed to go into 
operation under the new law, do not find it profitable 
to start, and intimations have been received from New 
England banks that they propose to reduce their circu¬ 
lation and withdraw the bonds deposited to secure it, 
as is being done by New York banks. Each day it be¬ 
comes more apparent that other causes than lack of 
currency are at the bottom of the depression in busi¬ 
ness ; and when ample seeurity for the public is demanded 
of the issuers of bank notes, they no longer clamor for 
the right tff increase those issues. 

The Chicago Times says, in a long article from which 
we give a few extracts: 

It is announced from Washington that the eastern 
banks are generally surrendering portions of their cur¬ 
rency in obedience to the requirements of the late cur¬ 
rency redistribution act, preferring their bonds to their 
circulation. Hence it appears that the impracticabili¬ 
ty of enforcing a redistribution act, of which Mr. 
Comptroller Knox has spoken so often and so confi¬ 
dently, is a humbug. The act of 1870 provided for a 
redistribution of orly $25,000,000, and Mr. Knox as¬ 
serted in his two last reports that it was impossible to 
enforce the act, and insisted that the only way to equal¬ 
ize the circulation was to authorize the issue of more 
in the West and South. But now that an act has been 
passed authorizing the redistribution of $55,000,000, or 
more than twice as much, it turns out that there is no 
difficulty about enforcing it; no difficulty in inducing 
the Eastern banks to surrender what the new law re¬ 
quires to be distributed. And now it remains to be 
seen whether the West and South will take the $55,- 
000,000. Probably they will, more or less rapidly, 
since the abolishment of reserve against circulation 
will increase the profits of issuing. But after all, what 
will be the good of it 1 


This promptness of the Eastern banks to surrender 
portions of their circulation is probably due not so 
much to their preference for their bonds as to their 
fear that opposition to the law would awaken hostility 
to the entire banking system, and lead to its abolition. 
Where the rate of discount does not average abovp G 
per cent through the year, there certainly must be 
more profit in issuing currency than selling the bonds 
and loaning the proceeds. If a bank surrenders $45,- 
000 of its circulation, it takes up $50,000 in bonds de¬ 
posited in the treasury as security for the circulation, 
and tiiese bonds will sell for about $58,500. This sum 
loaned at 6 per cent will produce an income of $3,500 
a year. If the bank retains the circulation, instead of 
surrendering it, the income is 6 per cent on $45,000 
circulation plus 6 per cent on $50,000 in bonds, less 
$450 tax on circulation. That is, the net income is 
$5,250. or $1,750 more than the income that would be 
realized by surrendering the circulation, and loaning 
the proceeds of the sale of the bonds. It is hardly sup- 
posable, therefore, that the Eastern banks are surren¬ 
dering their circulation from motives of gain, except 
where the rate of interest is very much above 6 per 
cent. 

As the New York Tribune says it is coming to be be¬ 
lieved that the new law will be so used by the older 
and stronger banks as to control the currency and in¬ 
sure a better rate of interest for their loanable fund*. 
Thus they may soon commence to return large 
amounts of country notes for redemption. The process 
is rendered extremely simple by the circular of the 
Treasurer, inasmuch as city banks have none of the 
burden or expense of assorting, but have only to gath¬ 
er up their surplus country notes, pack them off to the 
Treasurer, and receive legal tenders in return. This 
will strengthen city banks immensely, while at the 
same time it may create such an activity in money as 
to enable the better class of banks to earn nearly dou¬ 
ble the rates of interest that have prevailed for several 
months past. If, in addition to this, other banks shall 
follow in the wake of those who have already deter¬ 
mined to withdraw some $1,500,000 of circulating notes, 
the Tribune thinks there will be no difficulty in raising 
the rate of interest to at least a paying point. It adds : 

It seems not to have occurred to Mr. Knox, or to any 
one else, that the recent law abolishes redemption cities. 
Its language is “that so much of section 32 of said na¬ 
tional bank act. requiring or permitting the redemption 
of its (any bank’s) circulating notes elsewhere than at 
its own counter, except as provided for in this section, 
is hereby repealed.” There are, then, no redemption 
cities The purpose for which the national bank act 
of 1864 permitted the country banks to count as part 
of their reserves the deposits standing to their credit in 
the banks which Were their ledeeming agents is now ac¬ 
complished in another V r ay. There are now no de¬ 
posits which answer the description given in the law. 
There are no-balances “available for the redemption of 
circulating notes,” except in the Treasury of the United 
States, and in the vaults of the bank which has issued 
the note. What follows then ? Clearly the country 
banks must hereafter keep their fifteen per cent, re¬ 
serve on deposits in their own vaults, except that they 
may deduct from it the five per cent, deposited on 
circulation with the United States Treasurer. The 
banks in the redemption cities, however, would seem, 
through an oversight, to bs on a different footing from 
the country banks. The corresponding provision of 
the act of 1864. applying to them, reads as follows: 

“Section 32. Each association organized in any of the 
cities named in the foregoing section shall select, sub¬ 
ject to the approval of the controller of the currency, 
an association in the city of New York, at which it will 
redeem its circulating notes at par. And each of such 
associations may keep one-half of its lawful money re¬ 
serve in cash deposits in the city of New York.” 

The Tribune also points out that the redemption feature 
of the new law may prove to be an important one in 
another respect. It may worry the littlecountry hanks 
and induce many that depend mainly upon their circu¬ 
lation to give up banking. The Tribune says : 

There are hundreds of small banks that were started 
mainly to avail of the profits upon circulation, in addi¬ 
tion to the interest upon the bonds hypothecated for 
the redemption of their notes; and these have lived 
easily and comfortably because no considerable amount 
of their circulation was eveepresented for redemption'. 






































T4 


THE FIHAHCIAL RECORD. 


The first notice that they may receive from the United 
States treasury to redeem, however small the amount, 
will be a warning to take in sail. Their loans will be 
called in ; renewals will be refused ; and the business 
of banking ceasing to be profitable, will doubtless in 
many cases be abandoned altogether. This work, it is 
to be hoped, will proceed gradually, and being spread 
over so wide a territory, and divided among so large a 
portion of our business population, nothing like panic 
can be expected to result from it. It will be to the 
banks a healthful and harmless remedy, enabling insti¬ 
tutions that have real business to earn and pay satisfac¬ 
tory dividends, and compelling those which are unsound 
to retire. This is the complexion to which it is believed 
the banks will come at last. 

[From the X. Y. Journal of Commerce.] 

Of course it is well known that there will be a large 
amount of currency given up under the new law, and 
some of the shrewdest financiers belonging to the Clear¬ 
ing House Association, believe that the effect of the new 
act will be the reverse of inflation, but wi'l rot, when 
everything is adjusted, disturb the volume of currency 
to any appreciable extent. The $17,000,000 contrac¬ 
tion required by the 5 per cent, redemption reserve 
will be more than counterbalanced by the release of re¬ 
serve on circulation. Plenty of men would open a bank 
if they could, if they failed the next month; but the 
old Stagers in the business don’t want any more of the 
currency, especially with the redemptions, and so the 
absorption and rejectiou is expected to be about an 
even thing. The reasons for the desire of National bank¬ 
ers at this center to give up their currency, are so com¬ 
plex and numerous, that space forbids the entire argu¬ 
ment. What would induce one bank to do it would 
deter another. One bank, disconnected from all other 
National banks, would rather do a city business of 
discounts from deposits, and make a better profit with 
less risk, even if it changed its charter to a State in¬ 
stitution. The Third National gave up all its cir¬ 
culation but 845,000, which is minimum under the law. 
The immediate reason for exchange is the high price 
of bonds- The value of a thing is what it will sell for 
to-day, and with fives of 1881 selling at 114 1-4 to 114 
3-8, the banker’s deposit in the Treasury as security 
for circulating nets him only about 4 per cent, interest, 
while he can turn them into cash and lend the money 
at 8 to 10 per cent, on good commercial paper. 

The redemption feature of the new law is generally 
looked upon as the best thing in it, because it means 
a replacing of all the bank notes now in circulation 
with new ones. It is destined, too, to reach out to a 
basis for specie payments,and is the first heroic step in 
that direction. It is like a firm suspended on their own 
account, carrying an equal load of endorsements for 
their next door neighbor, also suspended from business. 
If the endorsers can spur their neighbors into activity 
and earnest energy, they can finally relieve themselves 
of the load, and both firms go on paying dollar for dol 
lar. The banks have contended that the burden of re¬ 
demption and resumption both should be thrown upon 
the Government; but this throws the burden of redemp¬ 
tion upon file banks, makes a basis of value, and pre¬ 
pares the way for resumption that the Government can 
inaugurate, and the banks help in when the proper 
time comes. 


The Grant-Jones Memorandum. 

A PHILADELPHIA VIEW OF THE FIXAXCE QUESTION. 

The Penn Monthly, an able and independent magazine, 
published in Philadelphia, gives in its July number, the 
following strictures on the President and his later finan 
cial opinions. In quoting this, or any-other comment 
on the currency question, our readers will, of course, 
understand that we do not endorse the opinions quoted, 
unless we expressly say so. It is our purpose to pre¬ 
sent all sides of the question—our own, most frequent¬ 
ly and strongly, of course, but not to the exclusion of 
other opinions, if sincerely held and ably presented, as 
in the present instance, and in a former number, when 
we quoted from an article of Mr. W. T. Harris’s in the 
St. Louis Journal of Speculative Philosophy. The editor 
of the Penn Monthly says : 

All the gratitude that Pre s ident Grant fairly earned 
by his veto of the currency bill he has put in peril by bis 
“Message to Senator Jones,” as some irate newspapers 
call it. To do him justice, the President means well 
enough. The ends he has in view are those of every 
honest and wise financier. But being a man without 
any practical experience of the operations of the money 
market, and of the effect of this or that measure upon 
them, he lacks all due sense of time and proportion. To 
borrow Lord Shaftesbury’s famous comparison, he sees 
that we are in the third story, and ought to go to the 
side walk; but he knows no difference between going 
down stairs and jumping out of the window. lie thinks 
everything that is to be done can be done before our 
national centennial—that the legal tender law can be 
safely repealed a year before that time, and the whole 
mass of the United States currency withdrawn from 


circulation and replaced by interest-bearing bonds, the 
redemption beginning July 1, 1876. Yet we next find 
him speaking of not re-issuing any United States notes 
of less denomination than ten dollars, which, like much 
else in his plan, suggests that he has no plan at all 
but fragments of half a dozen plans mixed up in his 
head. If the United States is to re-issue no notes, why 
put a stop to the re-issue of small notes especially? 

Anybody who gives the matter half a thought must 
see. that these contractive proceedings would simply 
draw a tourniquet around every artery of the national 
industry. A vast body of the money of the country, 
the instrument of association and that by which its ex¬ 
changes are effected, would be destroyed if the resump¬ 
tion succeeded; and nothing would take its place. 
The gold and silver, which some wise heads imagine 
to be valiantly lurking in some hole or corner, waiting 
for paper money to get out of the way, would be found 
to be nowhere. The terms of every contract made and 
not yet fulfilled would be altered ten per cent, in favor of 
the class that is best able to incur losses. The existing 
uncertainty, against which business men must insure 
themselves in gvery transaction, would be greatly in¬ 
tensified. The fortunes of the country would hang on 
the question, “Will the Treasury succeed in the battle of 
Armageddon that it has begun with the stock brokers ?” 
In a word, the Government would first throw the whole 
business community into bankruptcy, and then follow 
them thither. 

Passing to minor points, we are not surprised to find 
the President sharing in two very common financial 
superstitions—one native, one imported. He would like 
to “force redemption on the national banks.” The 
banks of the country are organized upon the basis of 
certificates of the national debt. They can only resume 
after selling their United States bonds, which they 
were created to form a market for. When they unload 
this vast amount upon the market, what chance will 
there be that the Treasury will be able to sell bonds 
enough besides to redeem the entire greenback curren¬ 
cy ? So much for the native American superstition— 
the hatred and suspicion of the national banks. The 
foreign one is the English suspicion of small notes. It 
once nearly ruined Scotland. Had not Sir Walter 
Scott, then in thehightof his popularity, interposed to 
keep England from cutting off the supply of Scotch 
small notes, that country would be far poorer in every 
respect. It is part of the notion that the credit system 
of the country is to be a first-class train of Palace Cars 
only, which has been the only justification of the pre¬ 
judices that the working classes entertain against the 
whole system. 

A wise resumption must be gradual and prudent. 
That the greenback dollar is not worth a hundred, but 
at most only ninety cents, is a misfortune. It was 
wrong in the Government ever to issue money that was 
not worth its face. But “two wrongs do not make one 
right,” and a hasty resumption would only do great in¬ 
jury to a new class of sufferers, without restoring what 
the first had lost. A wise resumption will be effected 
partly by gradually and slowly reducing the volume 
of the currency, at the same time that the business needs 
of the community grow up toward that volume; partly 
by making the volume more elastic, and therefore more 
adaptable to the needs of the country. “Nature does 
nothing by jumps,” and wise finance imitates her pa¬ 
tience. 

Spirit of the Press. 

[Lawrence (Kan.) Journal.] 

The New York Tribute howls over the new curren¬ 
cy bill and calls it “a practical inflation of at least §56,- 
000,000.” The truth is, it does not add a dollar to the 
currency now issued. It does provide, however, for 
liberating the currency and putting it where it will do 
the most good. Can anybody tell of what use §30,000.- 
000 of reserve locked up in national bank vaults was ? 
It was ostensibly to protect the circulation. But the 
circulation was already protected by the deposit of 
bonds. That $30,000,000 was just so much idle money, 
doing nobody any good. It will now stand some chance 
of going out into the channels of commerce. So of the 
$26,000,000 of the so-called greenback “reserve,” 
what good does it do locked up in the treasury vaults 
at Washington ? It is there only as a menace to busi¬ 
ness. Let it go into the channels of trade. 

[Columbus, (O.)Statesman.] 

The Cincinnati Enquirer is now trying its hand in de¬ 
stroying the ablest men in the Democratic party, simp¬ 
ly because they are sound on old time Democratic prin¬ 
ciples, and refuse to advocate the expansion- of an al¬ 
ready depreciated currency, and refuse to give their sup¬ 
port to a genecal system of improvements by the Feder¬ 
al Government. It might be well for the young men 
of the Enquirer to read General Jackson’s veto of the 
National Bank Bill and the National Road Bill. It 
might brighten up their ideas and bring them back to 
sound Democratic principles once more. They 
have been advocating Henry Clay Whig princi¬ 
ples long enough. The good of the Democratic party 
demands a different course on their part. If they wish 
to wield a commanding influence in the Democratic 
party, in the future, they must advocate Democratic 


principles as expounded by Jeflerson and Jackson and 
the other great leaders of the party. 

[Cincinnati Enquirer.] 

The above is full of falsehood. Our currency is not 
“d ^ireciated.” Every dollar of it is at par. It buys a 
dollar’s worth of anything—it pays a dollar’s worth of 
debts and a dollar’s worth of taxes. What more could 
any other do'lar do ? Our position on the currency and 
national improvements are not antagonistic to those of 
Jackson. He was opposed to a National Bank. So 
are we. He was opposed to a delegation by the Gov¬ 
ernment to corporations or individuals of the right, to 
issue money. This is our doctrine. He was not in fa¬ 
vor of a currency that was doubtful in *its character, 
which would not be received for taxes, which could not 
be given in payment of debts, and which generally was 
irredeemable. So are we. The ignoramus of the 
Statesman supposes that an old red-dog, safety-fund note 
or wild-cat bill, issued by corp (rations that had noth¬ 
ing behind it except a promise to be paid in specie over 
the counter of the bank that put it out, which was not 
receivable for taxes or individual indebtedness, is the 
same as the legal-tender money of the United States 
Government. 

[X. Y. Times, June 20.] 

During the late session of Congress one of the most 
marked features of the debates was a constant reitera¬ 
tion of the statement that the business of the country 
required more money. As a matter of fact, however, 
there has not been a time in many years when the cir¬ 
culating medium which we call money yens more plentiful 
in proportion to the business which it is required to do than it 
has now been for some time. Yesterday morning the rates 
for call loans which we published as having prevailed 
on the street oh Saturday, in the face of a rather buoy¬ 
ant stock market, were only from two to three percent. 
In Chicago the daily papers remark a greater ease and 
lower rates—five and six per cent.—in the money mar¬ 
ket than have been known therein many years. Nor 
is this disproportion of supply and demand in money 
peculiar to our own country. All the money centers 
of the world are heavily stocked. 

[X. Y. Tribune.] 

We have not thought it worth while to say anything 
about the intention of the framers of the new currency 
law. When an indefinite number of dogs get into a 
fight, there is, properly speiking, no intention whatever 
in the act. Each dog supposes that he knows what he 
is about, but the various dogs are moved by various pur¬ 
poses. There is a yelping, nnd snapping, a raising of 
dust, and a loosening of fur. The same thing happens 
when Congress takes action on a finance bill. The 
goddess Minerva instantly withdraws to a great distance, 
if perchance she be within hearing. The amendments 
to the national bank act must be interpreted, if possi¬ 
ble, by the ordinary meaning of the words used. It is 
idle to inquire what the intention was, since reason had 
no share in the business. 

[Chicago Times ] 

According to the Inter-Ocean the indications that the 
stone, repudiation, which the builders rejected in 1868, 
will scon become the “head of the corner,” are multi¬ 
plying rapidly. It is asserted that, since the adoption 
of the Pendleton platform at Springfield and Indian¬ 
apolis on the 17th of June, a multitude of circumstan¬ 
ces .“have served to consolidate, reanimate and 
strengthen” the party of Pendletonism “for a campaign 
whose end must be overwhelming victory.” It is com¬ 
plained that “expansionists” (the term which Scammon 
prefers to repudiationists) have been “cruelly misrepre¬ 
sented” by people wbo have accused them of being 
“expansionists” by other terms (such as “inflationists,” 
“repudiationists” and “Pendletorians,”) meaning the 
same thing. These epithets hurled at' them by “the 
bullionists—persons' who prefer money -worth a hun¬ 
dred cents to the dollar to evidences of debt that can be 
sold for only 87 cents, or less, per promise of the dol¬ 
lar—had staggered the “expansionists” a good deal; 
but when the resolutions committee of the Springfield 
convention “controlled by a majority of expansionists,” 
presented a platform with only one little clause in it 
hinting the contrary of repudiation, or “expansion,” 
and when that one little clause was stricken out by toe 
convention, and the platform, “drawn by expansion¬ 
ists, reported by expansionists” and amended by “ex¬ 
pansionists,” was “adopted by expansionists,” the “bul- 
lionists” or honest-money people were rendered “poiv- 
erless to criticize or oppose.” This “fitting supplement” 
of “the noble contest” for repudiation, “fought and won 
by expansionists in congress, but defeated by the Presi¬ 
dent,” is the chief circumstance which causes the j'oung- 
er organ of Pendletonism to predict an “overwhelming 
victory” for repudiation next November. 

[Chicago Post.] r 

The Tribune and Times feel sad when they contem¬ 
plate the Republican platform adopted at Springfield. 
The first plank, demanding that the protection of the 
nation shall be extended to all citizens, certainly can 
not be controverted. The second plank, stating that 
the §382,000,000 of legal-tender notes outstanding 
should not undergo the process of “immediate cancella¬ 
tion,” since they are not only a legal-tender, but the 
only legal-tender, at once available to the people, is not 
open to successful attack. The third plank, opposing 



















THE FINANCIAL RECORD. 


I 


75 


monopoly in banking, is certainly beyond criticism. 
The fourth plank, declaring for a return to specie pay¬ 
ments at the earliest practicable day, can not be rough¬ 
ly handled. 

[Chicago Tribune.] 

The President of the N. Y. Importers’ and Traders’ 
Bank testified before a committee of Congress last win¬ 
ter that if the law requiring one-third of its capital to 
be invested in bonds should be repealed, his institution 
would forthwith retire its circulation. That law has 
now been repealed, and we presume the Importers’ and 
Traders’ Bank is now' in the process of retiring its cir 
1 culation, as some of the Chicago banks are. And we 
venture to predict that years will elapse before as much 
new circulation will be called for as will be voluntarily 
resigned under the operation of the law recently passed 
by Congress. 


Old Fashioned Democratic Doctrine. 

■ One of the great lights of the Democracy forty years 
ago was Governor Sii.as Wright, of New York, who 
spoke thus when in the Senate of the United States con¬ 
cerning paper currency and legal-tender: 

What is called currency is the mere form of a prom¬ 
ise to pay, most hastily executed, without any intention 
on the part of the promiser to pay. and with the knowl¬ 
edge on the part of him who receives the promise as 

money that it will not be paid. All the banks 

have suspended specie payments, and we have an in¬ 
convertible, paper currency, depreciated on an aver¬ 
age full ten per cent, below the par value of money. 
This is the injury under which the whole people now 
suffer. It has proceeded wholly from overtrading, ex¬ 
cessive speculation, and all sorts of extravagance con¬ 
sequent on excessive banking, and the cheapening of 
credits, in every department of business. 

Again, Silas Wright thus recorded his judgment 
as to the constitutionality of a legal-tender paper cur¬ 
rency: 

That the only currency known to the Constitution 
is a currency of intrinsic value, a metallic currency, a 
currency of coin according to the value placed upon it 
by Congress, is a fact too plain for contradiction or 
question. Congress derives no power from that instru¬ 
ment to make, to establish or to regulate the value of 
any other currency, nor is anything else recognized 
therein as money. 

Martin Van Buren, while President thus expressed 
himself to Congress on the same subject: 

There can be po donbt that those who framed and 
adopted the constitution, having in immediate view the 
depreciated paper of the Confederacy, intended to pre¬ 
vent the recurrence of'similar evils. They gave to Con¬ 
gress express powers to coin money and to regulate the 
value thereof ; they refhsed to give it power to establish 
corporations, the agents then, as now, chiefly employed 
to create a paper currency. They prohibited the States 
from making anything but gold and silver a legal ten¬ 
der in the payment of debts, and the first Congress di¬ 
rected by positive law that the revenue should be re¬ 
ceived in nothing but gold and silver. 

Again, in summarizing the causes of the great panic, 
of 1837, both in the United States and in Great Britain, 
Mr. Van Boren said : 

In both countries we have witnessed the same redun¬ 
dancy of paper money and other facilities of credit, the 
6ame spirit of speculation, the same partial successes, 
at length nearly the same overwhelming catastrophe. 

Alexander J. Dallas, who was Secretary of the 
Treasury under Madison, discussed the question of 
making National currency a legal tender in order to 
carry on the war with Great Britain in 1814. In a re¬ 
port tp Congress Dallas thus declared against enforced 
legal-tender currency : 

Whether the issue of a paperxurrency proceed from 
the National Treasury or from a National bank, the ac¬ 
ceptance of the paper in a course of payments and re¬ 
ceipts must be forever optional with the citizens. The 
extremity of that day can not be anticipated when any 
honest arid enlightened statesman will again venture 
upon the desperate expedient of a tender law. 


Inflationists’ Column. 

[From the Chicago Inter-Ocean.] 

AN AMERICAN STANDARD FOR GOLD. 

We are permitted to make the following extract from 
an unpublished letter by the Hon. Isaac Buchanan, of 
Hamilton, Canada, to Mr. Henry Carey Baird, of Phila¬ 
delphia, on the subjeet of an American standard of 
gold. Mr. Buchanan thinks “the standard of gold fixed 
or aimed at should be American, not English,” and he 
indicates a principle, which, in his opinion, “would be 
an important step in monetary science.” He says : 

It might be proposed to approach as near as possible 


the President’s demand for “specie payments” by 
adopting an American, instead of an English, price for 
gold— a price, in fact, having some reference to value of 
other commodities, and especially to the value of money 
in America compared to Europe. But, without actually 
creating a standard price of gold by law, and constituting it 
a synonym, of money (a thing worth in interest double 
what it is in England,) I see that if government(through 
a government gold bank, or department, or otherwise,) 
were authorized by Congress to buy and sell gold, to 
the very few who have any use for it, at about the 
same price, say 115 or 120—the latter price being nearer 
its natural value —it would have the effect of giving the 
currency a fixed value practically. This would be still 
more assured if the government had on hand a large 
amount of the precious metals, and Congress had 
adopted and declared the principle of eventually hold¬ 
ing an amount of these equal to the amount of the 
greenbacks, even though doing this only gradually as 
it could be done without detriment to the industry and 
trade of the United Siates. This, of course, would be 
giving up the present gain, or saving of interest, 
through the greenback circulation, but it would not be 
losing any tiling directly (even when the time came that 
the greenbacks were entirely represented by gold and 
silver,) any more than by the President’s plan ; while, 
in the larger circulation and extension of banking, there 
would be a great indirect boon to the people—the tax¬ 
payers. 

To encourage the shipment of American produce iustead of 
gold by the foreign trade, I would give greenbacks for all 
the gold that could be got at 120. I would prefer giv¬ 
ing 120 rather than 115, because it would, in operation, 
be far better for the industry And all the internal inter¬ 
ests of the United States that the government should 
resell the gold at 120 1 4 than at 115 1 4, as the foreign 
opponent would just have so much more premium of ex 
change among the charges which make up the cost of 
his importations in American currency. This, of course, 
is a very different view from that of President Grant, 
under which the foreigner would have no premium of 
exchange at all among the charges which make up the 
cost of his importation, and under which he would not 
be like|y to send his remittance to Europe in cotton, 
wheat, or corn, or any American production, when he 
could get a bill of exchange at par instead of at 20 per 
cent, premium. Indeed, under the President’s plan, 
the American would not only have no advantage—he 
would have a positive disadvantage as compared with 
his foreign opponent, who would get paid in cash while 
he practically gets paid in trade —his reinvestment having 
to be (as originally the cost of the goods were, that 
opposed the foreign article)~in labor and raw material 
inflated by American taxes, and the comparative pros¬ 
perity of America. 

It is very plain that to adopt the English money 
standard in this country is an absurdity, seeing that 
the use or interest of money in England is from two 
and a half to ten per cent., while here it is from five to 
twenty per cent. ! To illustrate : The English mer¬ 
chant borrows $50,000 on twelve month’s time which 
costs in interest $2,500. The American merchant 
borrows the same sum for the same time but at double 
the cost—$5000. Mr. Buchanan proposes in part to 
equalize this difference between the rates of interest, by 
providing that the government shall purchase all gold 
offered at $1.20 with greenbacks, selling, at the same 
time at $1,20 1-4. This plan would make gold dearer, 
and the legal money of the country—greenbacks— 
cheaper. It would be a practical resumption of specie pay¬ 
ments at a standard of twenty per cent, lower than that of 
England. It would increase the volume of greenback 
currency by the amount of the surplus gold in the 
country. It would prevent fluctuations in the value 
of both greenbacks and gold, for it would prevent en¬ 
tirely speculation in gold, and establish the convertible 
value of greenbacks. The increase of the volume of 
the circulating medium—greenbacks—would tend to 
reduce the rate of interest, and so both, by the abun¬ 
dance and cheapness of money, stimulate into activity 
the now stagnant industries of the country. Gold be¬ 
ing thus made the dearest of all commodities, would be 
least sought for exportation; and corn, wheat, cotton, 
and manufactures would naturally take its place in for¬ 
eign shipments, to cover the adverse balance of trade. 
Under the President’s plan of specie resumption at the 
English money standard, gold would be the cheapest 
commodity in the market, and would naturally flow out 
of the country to meet all foreign bills. 

[From the Cincinnati Enquirer.] 

The money power, which is aiming at the overthrow 
of the legal-tender standard of value, under a pretense 
of gold resumption, have in view the imposition of the 
same financial system we had before the war. That 
was really irredeemable paper, pretendedly based upon gold. 
There is not one-quarter enough specie in the country 
to do the business of the country. In order to transact 
it there must be paper money of three or four times 
that amount. That money would all be unsafe under 
the old regime, and whenever there was a panic would 
cease to be of use, if it did not become altogether 
worthless. That is the kind of specie currency we used to 


have, and ivhich it is designed we shall have again. A cur¬ 
rency redeemable in specie, which is itself a commodity 
exported from the country, in order to meet the com¬ 
mercial necessities, is like building a house upon quick¬ 
sand on the shores of the ocean. It has no stability, 
and everything is liable to be swept away by the ebb 
and tide of gold. 

[Chicago North-Western Review.] 

As times get harder, business becomes more dull. 
Sales, if effected at ail, must be effected at a smaller 
margin, and loss stares the business man in the face. 
He looks about and finds that, in consequence of the 
depreciation of values, it will pay better to burn out than to 
a ttempt to sell out, nr to continue business . . . Contrac¬ 
tion, hard times, and numerous fires go hand in hand 
together, for an obvious reason. When the want of 
money is felt most keenly, people will take' the most 
risks to obtain it, and the easiest plan which presents 
itself to the unfortunate debtor is to arrange matters 
for a first-class house warming. 


v The Party Platforms. 

Iowa Republicans. 

Resolved, That as the policy of the Republican party 
in relation to finances has afforded the people not only 
a safe, sound and popular currency of equal and uni¬ 
form worth in every portion of our common country, 
but has likewise greatly improved the credit of the 
country at home and abroad, we point with pride to its 
record and accomplishments in this respect; and, while 
rea'ffirming the policy announced by the party in the 
National Conventions of 1868 and 1872, and triumph¬ 
antly indorsed by the people at the polls—a policy 
which, while contributing to the public credit, has also 
enhanced the individual and collective prosperity of 
the American people, we favor such legislation as shall 
make National banking free, under just and equal laws) 
based upon the policy of specie resumption at such time 
as is consistent with the material and industrial inter¬ 
ests of the country, to the end that the volume of cur¬ 
rency may be regulated by the material laws of trade. 

Resolved, That we reaffirnie the declaration of the 
Republican National Platform of 1872 in favor of the 
payment by the Government of the United Sates of all 
its obligations in accordance with both the letter and 
spirit of the laws under which such obligations were is¬ 
sued; and we declare that in the absence of any ex¬ 
press provision to the contrary, the obligations of the 
Government when issued and placed upon the market 
of the world are payable in the world’s currency, to 
wit, specie. 

Twelfth Indiana Congress District, Democrats. 

Whereas an irredeemable currency is calculatedio 
make the whole business interest of the country specu¬ 
lative, and thereby afflicts all reputable business with 
the peril of continued panic and disaster, that we are 
in favor of a return to specie payments as soon as it can 
be done without a reduction of the volume of the cur¬ 
rency and without producing injury to the business in¬ 
terests of the country. 

Eighth Illinois Congress District, Independents. 

That we demand the repeal of the National Banking 
law, and that the Government shall issue a legal-tender 
currency direct from the .Treasury, interchangable for 
Government bonds, bearing the lowest possible rate of 
interest, and which shall be receivable for both public 
and private dues. 


Sound Finance in Illinois. 

Prof. J. B. Turner, of Jacksonville, Ill., confessedly 
one of our ablest men, has been taking a somewhat 
prominent part in the “Independent Reform” move¬ 
ment, and has iu consequence, in the minds of many, 
been ranked among those unthinking persons who 
are crying out for “more money,” and who have an 
idea that Congress ought to issue greenbacks until 
everybody has his pocket full. Prof. Turner, however, 
is too sound a reasoner to be deceived by such fallacies, 
and too honest to pretend to believe them, even though 
addressing a gathering called largely to advocate the 
“more money” theory. In his speech at Galesburg 
last month, he makes the following statement which 
ought to open the eyes of some of the greenback pana¬ 
cea men; 

“The price of both gold and interest being now at 
less rates in the great centers of trade than it has 
averaged for ten or fifteen years past, plainly shows 
that our present distress does not arise from any de¬ 
ficiency of money in the country as a whole. 

“Under existing conditions, should the currency be 
doubled, the same game would be played over our 
heads worse than ever before, while in the end we 
should be compelled to meet all the costs and risks of 
the new expansion. We do, indeed, as we all declare, 
need more money; but we want to obtain it by releas¬ 
ing and putting to its proper and honest use what we 
already have, rather than by issuing more bank notes. 
Interest is now below three per cent, in New York, 
where the money is—less, indeed, than many of our 
Western annual taxes. More money piled up there 
will not help us.”— Jacksonville Journal. 
















‘puritan £torial 


Room 21. 



dcntt 


5 Pemberton Square, 


Boston, July 10 , 1874 . 


SPECIAL ANNOUNCEMENT. 


The Sixth Number of the Journal of Social Science, published by Hurd & Houghton, Riverside Press, Cambridge, and No. 3 Astor Place, New 
York, will contain & brief report of the General Meeting at New York, with about half the papers read there printed in full. Among the papers in 
this number will be, 

The Address of the President of the Association, George William Curtis, Esq., of New York. 

The Report of the Secretary, F. B. Sanborn, of Concord, Mass., on The Work of Social Science in the United States. 

The Paper of G. Bradford, Esq., of Boston, on Financial Administration; that of David A. Wells, Esq., of Norwich, Conn., on Rational 
Principles of Taxation; that of Willard C. Flagg, Esq., of Moro, Ill., on The Farmers' Movement in the Western States; that of Prof. Peirce, 
on Ocean Lanes for Steamship Navigation; that of Z. R. Brockway, Esq., of Detroit, on The Rejormation of Prisoners; that of Dr. E. M. Gallacdet, 
of Washington, on The National Deaf-Mute College, and that of George T. Angell, Esq., of Boston, on The Protection of Animals. 

There will also be included in this number the full proceedings of the Conference of Boards of Charities, with the papers read thereat, and 
the report of the Department of Social Economy on Pauperism in New York, with the remarks of Dr. John Hall, Dr. Bishop and others concern¬ 
ing it. If possible, the long paper of President White, of Cornell University, on The Relation of the State and National Governments to Advanced Edu¬ 
cation, will be added, with the remarks of President McCosh, of Princeton, thereon. Subscriptions to the Journal will be received either by the 
publishers or by the Secretary of the Association. The number will contain 200 pages and will be sold for One Dollar. Previous numbers of the 
Journal of Social Science can be obtained of Messrs. Hurd & Houghton, at $1 50 each. 

The rest of the papers read at New York will be printed in the Seventh number, to be issued in September, and among these will be Dr. Wool- 
sey's Paper on International Law, the papers on Sanitary Subjects, and the Financial Discussion. The Sixth number will be issued about July 20, 
and the Seventh number in the latter part of September. A list of the officers and members of the Association will appear in connection with the Re- 
ort of the New York meeting. 


GEORGE WILLIAM CURTIS, President, 
F B. SANBORN, Secretary. 


FINANCIAL RECORD. 

“WE NEED ONE THING BESIDES MORE MONEY, AND THAT IS BETTER M0NEY.”-5enator Zach. Chandler. 


VOL. I. FRIDAY, JULY 17, 1874. NO. 24. 


The Financial Record will be continued until further no¬ 
tice, and will be sent free of postage, to all persons who will re¬ 
mit 50 cents to the publishers. All editors who receive it are 
invited to send their papers in exchange. It will be no longer 
ublished by the American Social Science Association, 
ut for the present, as heretofore, communications respecting it 
may be addressed to the Secretary of the Association, F. B. San¬ 
born, No. 5 Pemberton Square, (Room 21,) Boston; and all ex¬ 
change papers, public documents, etc., maybe forwarded to the 
same address. 


Financial Events and Possibilities. 

The interesting question how far the new bank note 
redemption system is likely to prove effectual, seems to 
be in a fair way to be answered speedily. Before the 
machinery was fairly in operation, up to Saturday last, 
the offerings at the treasury were in excess of two and 
three quarters millions. A later despatch says that 
notes come in at the rate of nearly $700,000 a day. 
If this be true, Congress has given us a really effective 
system, and our currency will be elastic. In times of a 
plethora, these notes will be sent in ; and the banks will 
be forced to hold them until the usual fall stringency 
begins, when they will be abundantly able to meet the 
demands upon them. Thus panics will be averted, 
by the fact that there will be borrowable money when 
the demand for it comes. 

In answer to the idea that the redemption system will 
prove to be a means for “squeezing the countrybanks”by 
forcing them to keep their issues at home, a countrybank- 
er writes to the Boston Advertiser that the city banks 
being always indebted to their country correspondents, 
the latter will respond to calls for greenbacks to make 
good the five per cent, reserve in the treasury with 
drafts on the former; and thus city banks will be forced 
to meet with greenbacks the demands for redemption 
of country bank notes. The Advertiser while admitting 
the theoretical correctness of this idea, answers that 
the country banks have held balances in the cities for 
their own convenience, and the same motives will con¬ 
tinue to operate. Country banks may reduce their bal¬ 
ances in the redemption cities somewhat, but they will 
find it for their interest to make the amount gooc 
again. 

The New York Commercial and Financial Chronicle 

urges that the Treasury send to the redemption divi¬ 
sion all national bank-notes received in taxes or other¬ 
wise, atd thus help along the system. There is no 
possible objection to this proposition, but one or two 
semi-inflation newspapers, which are exceedingly so¬ 
licitous in behalf of the banks, oppose it without giv¬ 
ing any good reason. The Treasury regulation that 
any person may forward notes to Washington and re¬ 
ceive back legal tenders free of express charges, is very 
decidedly in favor of the activity of redemption. The 
only loss of the sender then, will be the interest on the 
amount while the process is going on, and as nobody 
will send notes which he can lend, the loss is practical¬ 
ly nothing. 

With regard to the new loan nothing is settled as 
yet. The bids will not be opened until after the next 
issue of the Record has been printed. It is statec 
that no bids have yet been received, but that is not at 
all against the success of the loan. Nobody bids unti 
the last moment, when values are calculated to the 
hundredth of one per cent. It would be strange if 
there were no bids for a loan which can be sold at par, 
when the outstanding issues are at more than two per 
cent, premium in the market. It is almost certain that 
there will be proposals for the full amount offered, 
and capitalists who refuse to bid through fear that 
more bonds of the same sort will soon be thrown on 
the market again, will find their mistake. 

It is the hope of the Secretary to sell the bonds for 
such a price as will save the double interest during the 
process of conversion. Whether this can be done is a 
matter of some doubt, but it is surely worth trying. 
The old “syndicate” arrangement was deservedly un¬ 


popular and costly. If the present experiment should 
fail it might be worth while for General Bristow to try 
another, slightly different. He could advertise for bids 
for the fives to be paid for and delivered at a jixed future 
date, say in three months. Then by “calling” five twen¬ 
ties to an amount equal to the accepted bids, the inter¬ 
est on the latter would be stopped at the time that on 
the fives begun. 


One Effect of Legal Tender Repeal. 

The possibility that the plan for specie resumption 
proposed by Judge Hoar, adopted by the President, 
and advocated in a recent pamphlet by Mr. Edward 
Atkinson, may be seriously discussed hereafter, is suf¬ 
ficient reason for considering one of the objections 
urged against it. We are not to be understood as fa¬ 
voring or opposing the plan; but only as examining 
one of the criticisms upon it. Some of the opponents 
assume that it the legal tender act were repealed the 
whole volume of paper money would become value¬ 
less, at least as money; when a creditor could demand 
hard money, it is supposed, he would demand it; and 
the whole issue of government currency must there¬ 
fore be regarded as so much subtracted from the money 
in circulation. 

This would be true if the government were to re¬ 
pudiate its paper formally, but that is something that 
is proposed by nobody. Every advocate of a repeal of 
the legal tender clause couples with this proposition 
one for the redemption of greenbacks, instantly or at 
a fixed time, in gold or in interest- bearing bonds. And 
this latter part of the scheme, instead of permitting a 
loss of value to greenbacks, fixes an absolute limit of 
price below which they cannot fall; and gives them a 
constantly increasing value up to the time of their 
final redemption. Let us suppose that the offer is to 
• allow greenbacks to be funded in “new fives” cne year 
from date. The present value of these bonds is, say 
112 1-2, in currency, which is equivalent to 102.41 in 
gold at 109 3-4. If greenbacks are fundable in these 
bonds one year from date, they are to-day worth an 
equal face amount of these bonds with one year’s cou¬ 
pons cut off. That is, they are worth a sum in gold 
which, with the usual rate of interest added, will, in one 
year’s time, amount to 102.41. If we take six percent, 
as the ruling rate, greenbacks are worth in gold al¬ 
most exactly 96 2-3 per cent, of their nominal value, 
or in other words, are at a discount of 3 13 per cent. 

Eluctuations in the gold value of bonds and varia¬ 
tions in the rate of interest would affect the price of 
greenbacks; but as time passed the difference between, 
legal tenders and gold would steadily diminish. On 
the basis of our calculation just made, $100 in green¬ 
backs would be worth, six months before convertibility, 
a sum which at the ruling rate of interest would amount 
in six months time to $102.41, that is, $99.33; or the 
discount would be but two-thirds of one per cent. 
Five months before ^convertibility they would bs al¬ 
most exactly at par, and thereafter they would be 
above par in gold, and would then really be “the best 
paper currency the world ever saw.” 

Any other set of circumstances will answer just as 
well to prove what we set out to prove, namely, that 
an offer to redeem at a fixed time in a specified way 
gives to paper an absolute value which constantly in¬ 
creases until the period of inconvertibility closes. What 
follows is easily to be seen. Paper is no longer a legal 
tender, but it has an exact value which anybody can 
calculate. It would therefore be refused by no person 
even if that value were constant. In fact, however, it 
is changing and improving. Consequently the credi¬ 
tor, in accepting paper at a discount would, in reality, 
take his pay in money that draws interest. Thus instead of 


demonetising paper, the legal tender act would make 
it precisely the kind of money that would be most 
sought after. The only possible difficulty would be, 
not what is too often supposed, that every holder of a 
greenback would be forced to keep it from the failure 
to find a taker, but rather that the holder would be 
unwilling to part with it. 


Paper Money and Specie Payments in 
France. 

[Paris Correspondent of the N. Y. Nation.1 

It has often puzzled me to find an explanation for 
the extraordinary fact that France, after paying a gi¬ 
gantic ransom and incurring enormous expenses, has 
not suffered in the same degree as the United States 
from a system of forced paper currency. The premium 
on gold never rose very high, and it can be said that at 
the present moment gold and paper are at par in France, 
while in America, nearly ten years after the victories in 
the Union, the premium on gold is still very high. I 
have been conversing with eminent financiers on this 
subject, and the lessons of the last year in France and 
Earope may be not without their utility for the United 
States. 

This is, I am assured, in all probability, the manner 
in which the payment of the five milliards of francs 
has been made to Germany: one milliard only was 
paid in specie; one milliard was paid with merchandise, 
in the form of paper on all the great commercial cen¬ 
ters in Europe; one milliard in French rentes, which 
were subscribed by England and Germany at the time 
of our great war loan; and two milliards were paid 
with various shares of all countries, which had been 
bought by the French people before the war. Five 
milliards in value were subtracted from France; how 
were they replaced? The three milliards of commercial 
paper or foreign stocks were replaced by French rentes; 
and it may be said that the exchangeable capital in 
France has increased rather than dec; eased, as the 
loans have amounted in ail to seven milliards. The 
circulating medium before the war was a sum of 1500 
millions in gold; now- we have 2500 millions of notes 
of the Bank of France. The French rente was issued 
at the price of 80 and is now worth about 95 francs; 
the public has, therefore, gained a sum of 900,000,000. 
Where is really the dark side of this picture is in the 
addition of 600,000,000 to our yearly budget. The ex¬ 
changeable capital has become larger, but new taxes 
have become necessary to the amount of 600,000,000. 
France, considered as one single capitalist, has bor¬ 
rowed money and seems richer for it, but has to pay 
an interest of 20 per cent, or 30 per cent, for the addi¬ 
tion to her exchangeable capital. 

Let us look now at Germany. What has become of 
our five milliards? 1,500,000,000 have served for 
the payment of expenses already made; three mil¬ 
liards have been used for the sinking of the debt. The 
German budget has become lighter in consequence, and 
175,000,000 are gained every year. But if the stale be¬ 
came prosperous, individuals did not feel at once the 
benefit of the sinking of the debt; holders of the na¬ 
tional stock were reimbursed to the extent of three 
milliards, and they had to ask themselves, What shall 
we do with the money ? Well, the money was not well 
spent, the nation lost its judgment. New banks, new 
railways, new companies created paper to the amount 
of seven milliards (while three milliards only were in 
reality available), and a tremendous crisis was the con¬ 
sequence of the speculative fever. Many of the new 
companies lost 50 per cent of their capital. How did 
this affect the value of gold in the various parts of Eu¬ 
rope ? The interest on gold fell everywhere—in Ger¬ 
many, in America, in England, while in France it could 
not fall under 6 per cent, so long as the national loan 
was issued, which gave this interest to all subscribers. 
It happened, in consequence, that France became a 
center of attraction for gold, especially when capital be¬ 
gan to avoid the speculative markets of Germany, and 
that silver and gold began to flow back to the vaults of 
the Bank of France, which contain now more than a 
milliard in specie. Under such circumstances, there can 
be no premium on gold in France, and, apparently, there 
ought to be no difficulty in the resumption of specie 
payments. Resumption would bring back more gold, 
to France—for this reason; as long as we are under the 
re'gime of paper money all international transactions 
must take place in pounds sterling, as the foreign bank¬ 
er or merchant is not willing to add to his risks those 
which might arise from a variation of exchange. This 
state of things obliges all the great banks and all the 
merchants to have a supply of gold in London, which 






















78 


THE FINANCIAL RECORD. 


has become a sort of clearing-houge for all the affairs of 
Europe ; and this necessity would cease if we resumed 
specie payments. The same is evidently true for 
America, and the American supply of gold in the city 
is probably much larger than the French supply. 

How would the resumption of specie payments affect 
the circulation in France ? The Bank has now 2,500,- 
000,000 of bills in circulation, the circulation of bills 
having been increased by one milliard since 1870. The 
augmentation in the circulation has been chiefly in 
small denominations; the bills of 5, 20, 25 amount at 
present to 800,000,000; but the bills of five francs are 
rapidly destroyed even now by the Bank as fast as they 
come in, and replaced by bills of 20 francs. The bills 
will not come back all at once, and it is probable that 
the sum total will only fall to the amount of 200,000,000 
or 150,000,000, which can be replaced by five franc 
pieces, of which there is a great abundance. At the 
very worst,-the public can only in the year 1874 ask 
300,000,000 or 400,000,000 from the Bank. The re¬ 
sources of the Bank are very large; they are the reim¬ 
bursements of the state, the superabundance of silver 
in its vaults, and, thirdly, its capital of 200,000,000 in 
French rentes. With these means it seems as if the 
Bank could face all difficulties. The resumption of 
specie payments four years after the war, and one year 
after the payment of the last milliard of our ransom, 
would be a great moral and financial victory for 
France. From a purely financial point of view no ob¬ 
jections can be made against this measure. It is, per¬ 
haps, not unobjectionable from other points of view. 

In France there is as much show of wealth, more 
gambling, more superficial prosperity than ever; the 
paper money helps to create the illusion; the paper 
notes circulate more rapidly than the heavy silver 
pieces. But is the nation richer'? No, indeed; it is 
poorer to the amount of the capital which the war has 
destroyed. France must be taught that she is poorer ; 
otherwise she will persuade herself that even defeat 
has no dangers for her, that she is like the phoenix of 
the fable. And what can teach her better that she is 
not what she was than paper money and a forced cur¬ 
rency ? Where can the pinch be better felt? To be 
sure, there is no premium on gold ; but still every peas¬ 
ant understands that the bank for the last three years 
has been unable to pay its bills in specie, that we have 
been living on the credit which we have been giving to 
ourselves. Jt is understood here that Germany regrets 
not having imposed a heavier fine on France. Ger¬ 
many sees only the surface of things ; she does not 
perceive all the sufferings, the miseries which are felt 
now among all classes, especially among the commer¬ 
cial classes of the towns; she has only heard the boasts 
of M. Thiers, and she may believe that we do not 
really suffer. The resumption of epecie payments 
would accredit this opinion; and there would perhaps 
be a positive danger for France in the conviction that 
France has hardly been made poorer by the war. 

In America such reasons cannot be given. America 
has not been conquered; the Union has lost no prov¬ 
inces. To be sure, new taxes have been necessary in 
order to pay the interest on the debt, but the Union 
has a commanding position, it need fear the jealousy of 
no neighbor; large silver mines have been opened in 
various parts of your continent; California, Colorado, 
and Nevada are as good as the vaults of the Bank of 
France, filled with silver and with gold pieces; and if 
the perspective of the resumption of specie payments 
seems in your country like a fleeting dream, it must be 
the fault of your economists and statesmen. Such at 
least is the conviction of all economists on this side of 
the Atlantic. I belong to no sect of political economy, 
but it has always puzzled me to find so much political 
experience and sagacity in the United States, and at 
the same time so little disposition to follow the lessons 
of experience in matters of finance. I am convinced 
that the policy of free-trade could not be well applied 
to a country where industry is not yet organized ; but 
the policy of protection of national labor can only be 
well defended on the plea that the country must have 
its own supply of capital; and a perpetual forced cur¬ 
rency would tend to prove that this object had not been 
attained. 


Spirit of the Press. 

[San Francisco Bulletin.] 

The national banking iniquity was eagerly partici¬ 
pated in by men of all political parties, its dependence 
being not upon sentiments of patriotism, but upon an 
inordinate desire for the accumulation of riches. Re¬ 
publicans and Democrats alike availed themselves of 
its extraordinary advantages, and it has had from the 
beginning the support of the moneyed men of the 
country, and such as were in any way dependent upon 
them. It is often asserted, in vindication of the system, 
that so much was due from the government to the cap¬ 
italists of the country, in consideration for their having 
furnished the means, as they allege, for putting down 
the rebellidn. 

The fact is, the national banking privilege had but 
little to do with Government loans and Government 
bonds. It was another and entirely distinct extortion. 
Its whole operation is to make the rich richer and the 


poor poorer, and to create a monopoly of money. It is 
wrong in general and in detail, wrong in principle and 
in practice, and has for its support only the authority 
which is found in Matthew, 25th chapter, 29th verse. 

[Sacramento Record.] 

The San Francisco Bulletin has been lately putting 
fortlfsome of the most astonishing articles on finance 
which it has ever been our fortune to encounter. The 
writer, who would seem to have been in a state of 
coma during the past ten or twelve years, advances, 
with full faith in its originality and ingenuity, the bril¬ 
liant idea that the way to get resumption is for the 
Government to issue a bond bearing low interest, and 
exchangeable for greenbacks. It is needless to observe 
that this proposition is identical with that which the 
Western farmers have recently adopted, or that it 
never could by any possibility have commended itself 
to anybody who had the least knowledge of finance. 

It is a pity, for the Bulletin’s financial theories, that 
the greenback dollar cannot be got to repiesent a dol¬ 
lar in gold, and that unredeemable promises cannot be 
got to be accepted as redeemed promises. But so 
long as there is any general harmony of opinion as to 
the meaning of the term honesty, and so long as gold 
and silver continue to be the sole measures of value, 
so long will it be impossible for the Bulletin’s ideas to 
find practical expression. 

[Springfield (Ill.) Journal.] 

Gold declined in New York on Monday last to 110 
—nearly as low a point as it has reached in the past 
six months—and that, too, in the face of a practical 
expansion of the currency to the extent of $80,000,000 
to $50,000,000. This is a conclusive refutation of the 
assumption of the contractionists that a moderate in¬ 
crease of currency must necessarily result in a strong 
advance of the gold premium. 

[Jacksonville (Ill.) Journal.] 

Even the Springfield Journal’s office boy knows that 
the new law not only does not add a dollar to the 
amount of currency issued by the government, but ex¬ 
pressly decides that there shall not be even the “mod¬ 
erate increase’' of $18,000,000, which that paper has 
cried for so long. It says the greenback currency shall 
not be increased above the $382,000,000 now out—and 
hence of course confidence in its value at once grew 
stronger. But had the gates been opened to a further 
issue gold would have commenced to go skyward. 

[Buffalo Commercial Advertiser.] 

A Washington special says that the West is asking 
for very little currency under the new law, and that it 
is believed in official circles that the circulation of East¬ 
ern banks will not be disturbed before the assembling 
of Congress. This is just what those who were honest 
and knew anything about the matter predicted would 
be the case when the currency discussion was going on. 
Ever since the severe spasms of last year’s panic pass¬ 
ed away, the people of the West have been able to se¬ 
cure the money they wanted when they had anything 
to exchange for it. The practical working of the new 
currency law strikingly illustrates how little there was 
in the hue and cry raised in some quarters last winter 
about the great need of having more paper circulation 
at the West. 

[Vicksburg (Miss.) Times.] 

The new financial law is a triumph for expansionists, 
and its approval by the President can only be account¬ 
ed for on the ground that he proposes to adhere to his 
pledge to have no policy contrary to the will of the 
people. 

[St. Louis Globe.] 

The New York World is enamored of the Democrats 
of Indiana, for nominating Mr. M. C. Kerr, whom it 
describes as a statesman. We are prepared to admit 
that Mr. Kerr is a statesman ; but has the World read 
Mr. Kerr’s letter to his Democratic friends, wherein he 
pleads with them not to believe for a moment that he 
is in favor of resumption ? Mr. Kerr, we believe, falls 
under the censure pronounced by the World on the sin¬ 
ners who fell short of their duty. It was not enough, 
said the World , to take no steps away from specie re¬ 
sumption ; the man who failed to take steps toward re¬ 
sumption was equally derelict. That brick, thrown at 
a venture, seems to us to graze the statesmanlike head 
of Mr. Kerr. But, possibly, the World holds the creed 
attributed to the Jesuits by Macaulay, and thinks it is 
quite bad enough for a statesnjan to be an inflationist, 
without having him a Republican at the same time. 

[Grand Rapids (Mich) Democrat.] 

This question of redistribution of the bank currency 
is one that has yet to undergo much discussion, and the 
point to be arrived af in that discussion is one of com¬ 
pulsory legislation. All of our legislation with regard 
to financial questions for the last fourteen years past 
has been of a compulsory character. We want redis¬ 
tribution in such a form as will compel the New Eng¬ 
land bankers to arise and come West. 

[Traverse Bay (Mich.) Eagle.] 

The Democrat should demand legislation requiring 
the New England capitalists not only to come West 
and bring their capital with them, but compelling 
them to distribute the same pro rata among all the in¬ 
habitants of the West, giving every man, woman and 
child a share—for we see no other way to get money 


out of the hands of the New England man, even after 
you get him and his cash in the West, unless you have 
something to give him in exchange therefor, in which 
case it matters not whether the banker lives in the 
East or the West, the money will find its way to the 
place where it can be purchased. 

[Columbus (Ind.) Republican.] 

There is but little hope of the new law accomplish¬ 
ing any material change, for the increase of the curren¬ 
cy depends solely upon the future action of the Secre¬ 
tary of the Treasury, as he is not prohibited from hold¬ 
ing on to his millions of surplus greenbacks received 
quarterly by the Government. Thus it is plainly to 
be seen that he holds the power of contraction in his 
own hands yet. 

[New York Commercial Advertiser.] 

The purpose of the Currency Act, and its plain and 
sensible provisions were to afford relief and to reassure 
financial confidence, and there is no question that such 
has been, and will continue to be the effect and that a 
gradual decline in the premium on gold will follow. 
There will be nothing left of the question, therefore, by 
the time the canvass for Governor and Congressmen 
fairly opens to fret or divide the popular opinion. 


Banking and Discount in St. Louis. 

[From the St. Louis Globe.] 

The careless reader, seeing the bank rates of dis¬ 
count quoted in our financial columns at “from eight to 
ten per cent.,” might be led to suppose that there were 
occasionally intervals when the bank rate of discount 
was n'ot from eight to ten per cent., wherein the careless 
reader would be mistaken. St. Louis has grown from 
a village to a great city; has buried the oldest inhabi¬ 
tant by the hundred, and produced the youngest by the 
thousand; has endured martial law and all the convul¬ 
sions of the civil war, has even known the depth of 
transition from a Republican to a Democratic adminis¬ 
tration, but never has it ever been known to offer any 
other official quotations of rates of discount than tLe 
stereotyped eight to ten per cent. We mention this 
fact, not for the enlightenment of the careless reader, 
nor yet for the admiration of the Historical Society, 
but as a fact of great practical meaning to the whole 
current of our daily business, and because it seems in 
its unyielding rigidity to be somewhat out of place 
amid the constantly varying conditions under which 
business is transacted. It might be susceptible of a 
demonstration that, under exceptional circumstances, 
persons applying for discounts have paid more than ten 
per cent., but we are not permitted to quote such trans¬ 
actions as forming really a part of the banking busi¬ 
ness ; to do so would be to admit a violation of those 
wise and just usury laws which are the mainstay of 
our finances and the boast of our legislation. But if 
banking corporations may have charged more than the 
legal rates at a time when municipal corporations were 
forced to set the brown-back mill a-grinding, they have 
never been known to transgress that unwritten law 
which declares that if a man cannot pay eight per cent, 
for money, he has no use for money. “We will take 
four per cent, on call in New York,” say the banks, 
“before we will lower ourselves to seven per cent, at 
home.” 

The question is a pertinent one to consider now, be¬ 
cause the same financial reports which quote the stereo¬ 
typed formula of “eight to ten per cent.” vary the ac¬ 
companiment, by adding that applications are very 
scarce, that there is no demand for money, that there is 
a plenty of loanable funds on hand, and other phrases 
which sound incongruous beside the high-sounding fig¬ 
ures of the quotations, and this makes it look to out¬ 
siders as if St. Louis had not outgrown village methods 
and village traditions. We have no hope of seeing the 
time when the money market of St. Louis will be really 
a money market; when discounts will be sold across 
the counter as exchange is ; when the name of the pur¬ 
chaser will be nothing and the value of the security 
everything; when a merchant can count on buying 
credit as freely as he can buy cotton in the warehouse 
or corn in the elevator; but it is worthwhile glancing 
at such a condition of affairs in order to mark the in¬ 
terest which separates us from it. And when we have 
mentioned these features of the London money market, 
we have only to add that, in Lombard Street, the rate 
of discount fluctuates from two per cent, to ten per 
cent., and every hair’s breadth of its graduation indi¬ 
cates the equilibrium between the supply and the de¬ 
mand in a real money market. 

If business men will not borrow money at eight per 
cent, it could hardly ruin the community if the attempt 
were made to see whether they would not.borrow it at 
seven per cent. If money accumulates idly in the 
vaults at eight percent., why not try whether a healthy 
activity would not be started by lowering the rate ? 
Money is worth what it will bring ; it is certainly not 
worth any more; and our bankers who protest against 
the imbecile and exasperating statutes of usury, are 
somewhat inconsistent in fixing a limit quite as arbi¬ 
trary and a great deal more rigid than the one which 
attempts to fix the maximum of legal discounts. 













THE FINANCIAL BECOBD. 


79 


Inflationists’ Column. 

[Philadelphia Press.] 

The final settlement of the currency question and 
the adjournment of Congress we predicted would be 
followed by a revival of prosperity. So it is proving. 
From the day the President signed the new currency 
bill there has been a perceptible improvement in nearly 
all forms of business. The ever-sensitive stock market 
first showed the increased confidence by an advance in 
prices along the whole share list. There was no inflation, 
and gold, so far from rising, has steadily declined, 
though the new law effects a considerable increase in the vol¬ 
ume of currency. The inquiry for all kinds of goods 
has been on the increase ever since, and the prospects 
for a large fall trade are excellent. 

NATIONAL. BANKS AND FINANCE. 

[San Francisco Bulletin.] 

Six years ago almost §2,100,000,000 of the national 
debt bore interest. The portion that bears interest now 
is a good deal less than §1,800,000,000. Four hundred 
and thirty millions of the debt constitute part of the 
money or circulation of the country. The remaining 
§350,000,000 of the circulation is made up of national 
bank-notes. If these latter had never been issued, and 
a like amount of United States notes or greenbacks, as 
they are called, had been issued in their stead, the in¬ 
terest-bearing indebtedness of the nation would have 
been only about $1,400 000,000. It is beyond dispute 
that the greenbacks are at least as good and valuable 
as national bank notes. They have for their basis the 
faith and credit of the United States, and the bank 
notes certainly have nothing- more. The security for 
the latter are Government bonds, but the bonds depend 
for their payment upon the good faith of the nation; 
and the United States notes, or greenbacks, have pre¬ 
cisely the same reliance. To speak of the greenbacks, 
therefore, as an unredeemable currency, and of bank 
notes as something better, is a palpable fallacy. The 
one is no better than the other, and both are entirely 
good, having as security for their payment the total 
wealth of the nation, backed up by the faith of the 
Government that a sufficient amount of it will, in due 
time, be properly applied to their liquidation. There 
is no irredeemable currency in this country; the Gov¬ 
ernment is able and willing, and at the right time will 
pay every dollar that she owes. The clamor against 
greenbacks is without any good foundation, and is in¬ 
stigated in the interest of the national banking system, 
which is vicious and oppressive to the last degree. Un¬ 
der that system the Government has already given out, 
or loaned as a perpetual loan without interest, to a 
couple of thousand banking associations, near four 
hundred million dollars in money, and the clamor to in¬ 
crease that loan is constant, long and loud, at Washing¬ 
ton. The greenbacks are the principal obstacle in the 
way of that increase, and hence the war upon them. 
They constitute money the same as the bank-notes, 
and must be got out of the way before the bank note 
circulation can be largely augmented. But precisely 
the opposite policy ought to prevail; that is to say, the 
national bank-notes ought to give place to the United 
States notes, and the whole circulating medium of the 
country should absorb so much of the national debt. 
Not four hundred and thirty millions only, but the en¬ 
tire eight hundred millions required for circulation 
should be in that form. 

It is a matter of astonishment that the schemes of 
Morton, Logan, and other Western members of Con¬ 
gress have no better support than a desire that a few 
people of their States shall be permitted to share in the 
abominations of the national banking system. Their 
case plainly stated is, that the Government has dona¬ 
ted, or, which is the same thing, loaned without inter¬ 
est to certain citizens several hundred millions of dol¬ 
lars, the larger proportion of which has found its recip¬ 
ients in the Atlantic States, and now Logan, Morton 
& Co., demand that the Treasurer shall be authorised 
to give out fifty or a hundred millions more of this 
bank money in order that their particular constituents 
may have their full proportion of it; and strange to 
say, they are willing that a like amount of greenbacks 
shall be converted into interest bearing bonds, thus in¬ 
creasing the burdens of the people, in order to make 
room for such additional bank circulation ; and all to 
the end that a few of their wealthy fellow citizens may 
share in this bounty ef the Government. It is chiefest 
among the wonders of this age that the people have 
so long endured without murmuring this.most extra¬ 
ordinary national banking law ; but the time is com¬ 
ing, and is not far off, when it must follow the rebel¬ 
lion, out of which it alone could have sprung. 


Secretary Bristow. 

[From the Cincinnatti Gazette.] 

The new Secretary of the Treasury has our best 
wishes for his success. In America we manufacture 
great statesmen very quickly on trust. We hope the 
new Secretary will come up to the most generous an¬ 
ticipations; that he will determine to organize his de¬ 
partment on business principles, resisting all political 
considerations and all impositions of personal and par- 
tv favoritism, whether from Congressmen or President. 
Whether a Secretary can carry this out is a question ; 


but the heroic method is to make an effort and, if it 
encounters an opposition he cannot overcome, to re¬ 
sign. 

What is the value of the statement that he and the 
President are in accord in financial and currency poli¬ 
cy, is more than we can find out. The President’s de¬ 
liverances on currency in his veto message and in the 
Jones memorandum, are diametrically opposite to those 
he put forth iu his last annual message, wherein he 
went to the extreme of the inflation fallacies, which 
treat money not as a fixed measure of values and me¬ 
dium of exchange, but as a high pressure engine to 
move things. The Jones thing was a change to the ex¬ 
treme of naked “hard money,” and the policy of a sud¬ 
den jump down to it. We hope that Mr. Bristow is in 
accord with neither; that he does not believe in dilut¬ 
ing money to make prosperity by an apparent rise of 
prices, nor in a sliding measure of obligations ; and on 
the other hand, after government has issued near 800 
millions of currency and all values have adjusted them¬ 
selves to this, we hope Mr. Bristow does not believe in 
striking this out, and changing the standard of value 
of all property, and raising the obligations of 10,000 mil¬ 
lions of private contracts not less than one third. 

The President’s annual message advised an increase 
of currency to keep pace with the growth of the 
country. The President had a large share of respon¬ 
sibility for the agitation of inflation in Congress. He 
had a new light duriug the session ; but the other ex¬ 
treme which he then flew to would be absolutely de¬ 
structive; whereas, inflation is only a gradual depre¬ 
ciation of money. 

We hope the new Secretary will cut loose from all 
syndicates, and will make whatever exchanges he 
thinks profitable directly .at the Treasury. We hope 
he will report against the useless offices all over the 
land. We hope he will clean out that old den of 
thieves, the New York Custom House, and will rout 
the gang that bas fastened itself upon the department 
iu various ways, as detectives, collection jobbers, and 
so on. If not supported in this, we hope he will make 
the issue squarely with whatever power prevents him. 
It is time that civil service reform were beginning in 
this way at the head. And we think we can mention a 
way in which the Secretary can make a failure, and 
can bring the Treasury Department into even worse 
repute, and that is, to run it to help a third term. 


Gleanings. 

Government bonds are higher than yesterday, the 
business continuing on a restricted scale. We do not 
hear of any bids filed for the new fives under the pro¬ 
posal of the Treasury to sell the whole or any part of the 
remaining §179.000,000, which had not been negotiated 
when General Bristow became Si cretary. To investors, 
corporate or private, who wish to hold this class of 
bonds the opportunity is presented of getting them 
direct, and if they can be had direct any time before 
the 23d at a lower price than they Can be bought in 
open market we shall be surprised if a considerable 
amount is not bid for .—New York Evening Post, 14 th. 

The Washington weekly currency statement for 
July 11 shows of United States bonds held by the 
treasurer to secure national bank circulation, $390,111,- 
800; and for public deposit, §16,595,200; national 
bank circulation outstanding, $348,908,979; amount of 
national bank notes received for redemption under the 
currency act to July 11, $2,862 070. 

The New York bank averages for the same week 
compared with those of the preceding week, show a 
gain of §5,441,100 specie and a decreased $2,325,400 in 
legal tenders. The only other important change is an 
increase in deposits of $2 080,100, the change in loans 
having been only $333,800, and in circulation only 
$59,800. The aggregate banking strength of the banks 
has been increased so that they now hold, in what is 
reckoned as lawful money, $27,829,100 more than the 
legal requirement, their actual revenue being §88,710,- 
500. 

The exports of specie from New York for the week 
ending July 11, have been $1,095,947.59; total since 
January 1, 1874, 26,267.973.98; same time 1873, §30,- 
829,239.98 ; same time 1872, §44,007,060.43 ; same time 
1871, §48,403.992.47 ; same time 1870, §20.936,753.85; 
same time 1869, §18,812,732; same time 1868, $57,392,- 
851; same time 1867, §33,686,053; same time 1866, 
§49,958,796. 

Micliael C. Kerr, formerly a member of Congress 
from Indiana, and now a Democratic candidate for re- 
election, says : “Inflation would not bring true or hon¬ 
est relief to the people. It is not what they need. They 
need more capital, more of the earnings of labor and 
the accumulations of economy, and less credit, less 
debts—not more depreciated currency. Inflation, like 
protection, is essentially dishonest and unequal.” 


Party Platforms. 

Fibst Congbessional Distbict, Ohio, Democbatic 
That the present amount of the circulating medium 
of the United States is entirely insufficient to meet the 
wants of the business and industrial interests*of tlie 
country; that it should be increased to a sum more 


commensurate with our necessities, and should be all 
in legal tenders instead of part legal tenders and part 
National Bank circulation ; that it is a suicidal policy 
to call in legal tender notes, held by the people with¬ 
out interest, in order to substitute for them gold bear¬ 
ing interest bonds, and that the exertions of the Ad¬ 
ministration to that end deserve our severest censure. 

That while we are burdened with a debt of twenty 
five hundred million dollars, carrying with it an im¬ 
mense interest, and accompanied with great annual 
expenses in other respects, it is not practicable to re¬ 
turn to specie payments, and that an attempt to do so 

would entail unspeakable financial ruin.” 

• 

The New Loan. 

In consequence of some obscurity in Mr. Bristow’s 
circular, the Secretary has been applied to for more ex¬ 
plicit information, and answers that he “expects pro¬ 
posals for new fives, to include interest until the expira¬ 
tion of the call, upon a corresponding amount of 5.20s, 
90 days.” In other words, Mr. Bristow proposes to 
avoid the payment of double interest upon 5s and 6s 
during the progress of exchange, which was compound¬ 
ed by Congress in the case of Messrs. Boutweli, Rich¬ 
ardson and the syndicate. This is a strong point in 
favor of Mr. Bristow’s honest administration of his de¬ 
partment, the only question being, can it be success¬ 
fully carried out ? Taking the prices of gold and bonds 
on Saturday as a criterion, there is a very narrow mar¬ 
gin, if any. The day of opening the bids, however, is 
ten days off. The indications, we see stated, point to a 
large demand, in which the European bidders may 
close up all that our people leave untaken of the $179,- 
000,000. Supposing the whole amount subscribed for 
at an early date, and this seems entirely possible, the 
Secretary would have to call in, besides the §161,600- 
GOO of 1862s not yet called, about $17,400,000 of the 
1864s. The 1864 loans together are not quite $59,000,- 
000 in amount, so that only $41,600,000 of them would 
remain for the year’s purchases for the sinking fund ; 
purchases estimated as §29,918,000 for the fiscal year, 
and whatever more the revenue may enable the Sec- 
raty to accomplish. 


Bank Notes and Bank Deposits. 

Under a strict rule a bank deposit and a bank note 
ought each to be a symbol or representative of capital, 
—either of specie or of a substance on its way from the 
producer to the consumer. The farmer takes his 
wheat to the miller and sells it for one hundred dollars 
on three months credit; The miller’s note is then the 
symbol, or, we might say, the shadow of one hundred 
bushels of wheat on its way to consumption; the farm- 
e- takes the note to the bank and it is discounted, the 
proceeds becoming a deposit in bank, which deposit 
again is the shadow of the wheat; the farmer draws 
out bank notes for the deposit, and the bank notes then 
represent the wheat and are secured by it. The miller 
has iu the meantime converted the wheat into flour, 
and has it for sale; the farmer pays out the notes in 
wages, or for articles needed by him, and those to whom 
he {iays them, needing flour for consumption, buy it of 
the miller, and with the bank notes the miller pays his 
own note at the bank that issued them. The bank 
thus redeems them. The production and sale of the 
wheat led to the creation of the miller’s note, the 
discount,, the deposit, the issue of the bank note, its 
circulation, and finally its disappearance by redemp¬ 
tion because of the final purchase for consumption of 
the flour made from the wheat. Each and all the nofes 
issued and the credits granted have been the shadow 
or symbol of the wheat. No gold appeared in the 
whole transaction, yet the standard throughout 
was gold, and the bank stood ready with its reserve 
in its coffers to pay any note-holder in coin 
who might happen to want gold rather than flour. 
This reserve of gold was the test, throughout, by which 
each, person, banker, miller, farmer and laborer, was 
assured that the word dollar bore the same meaning or 
value to each and all; for whereas the value of the 
wheat varies from season to season in accordance with 
the law of supply and demand, the gold on the other 
hand is so restricted in supply, and in such universal 
demand, as to vary but slightly in estimation in the 
course of-centuries. 

Those who seek to displace it and to substitute paper 
tokens or other devices, simply invoke the force of law 
to make something else, or some shadow or promise of 
something else, a legal tender in place of the money of 
the world which mankind has freely chosen. The 
function of statute law in regard to money is to estab¬ 
lish the weight and fineness of the coin, and guarantee 
it with its mint mark; next, to name it. In this coun¬ 
try the name chosen for our coin is dollar. A true 
legal tender act is one which simply defines the method 
by which a contract to pay dollars may be enforced. 
Our false legal tender act compelled the acceptance of 
the shadow, not the substance. In other words, it was 
a statute for the breaking, not for the enforcement of 
contracts, justifiable, if at all, only under and during 
the stress of war .—Edward Atkinson, in the Atlantic 
Monthly for A ugust. 














5 Pemberton Square, Room 21. 

Boston, July 17, 1874. 


SPECIAL ANNOUNCEMENT. 


The Sixth Number of the Journal of Social Science, published by Hurd & Houghton, Riverside Press, Cambridge, and No. 3 Astor Place, New 
York, will contain a brief report of the General Meeting at New York, with about half the papers read there printed in full. Among the papers in 
this number will be, 

The Address of the President of the Association, Geohge William Curtis, Esq., of New York. 

The Report of the Secretary, F. B. Sanborn, of Concord, Mass., on The Work of Social Science in the United States. 

The Paper of G. Bradford, Esq., of Boston, on Financial Administration; that of David A. Wells, Esq., of Norwich, Conn., on Rational 
Principles of Taxation; that of Willard C. Flagg, Esq., of Moro, Ill., on The Farmers' Movement in the Western Slates ; that of G. G. Hub¬ 
bard Esq., of Cambridge, on American Railroads; that of Prof. Peirce, on Ocean Lanes for Steamship Navigation; that of Z. R. Brockway, Esq., of 
Detroit, on The Rejormation of Prisoners; that of Dr. E. M. Gallaudet, of Washington, on The National Deaf-Mute College, and that of George T. 
Angell, Esq., of Boston, on The Protection of Animals. 

There will also be included in this number the full proceedings ot the Conference of Boards of Charities, with the papers read thereat, and 
the report of the Department of Social Economy on Pauperism in New York, with the remarks of Dr. John Hall, Dr. Bishop and others concern¬ 
ing it. The paper of President White, of Cornell University, on The Relation of the State and National Governments to Advanced Education, will be 
deferred to the Seventh number. Subscriptions to the Journal will be received either by the publishers or by the Secretary of the Association. 
The number will contain 200 pages and will be sold for One Dollar. Previous numbers of the Journal of Social Science can be obtained of Messrs. 
Hurd & Houghton, at $1.60 each. 

, The rest of the papers read at New York will be printed in the Seventh number, to be issued in September, and among these will be Dr. Wool- 

sey’s Paper on International Law, the papers on Sanitary Subjects, and the Financial Discussion. The Sixth number will be issued about July 25, 
and the Seventh number in the latter part of September. A list of the officers and members of the Association will appear in connection with the Re¬ 
port of the New York meeting. 

GEORGE WILLIAM CURTIS, President, 

F B. SANBORN, Secretary. 


FINANCIAL RECORD. 

"WE NEED ONE THING BESIDES MORE MONEY, AND THAT IS BETTER MONEY.”—Senator Zach. Chandl&r. 


VOL, I. 


FRIDAY, JULY 24, 1874. 


NO. 25. 


The Finacial Record will be continued until further no¬ 
tice, and will be sent free of postage, to all persons who will re¬ 
mit 50 cents to the publishers. All editors who receive it are 
invited to send their papers in exchange. It will no longer 
published by the American Social Science Association, 
but for the present, as heretofore, communications respecting 
it may be addressed to the Secretary of the Association, F. B. 
Sanborn, No. 5 Pemberton Square, (Room 21,) Boston; and all 
exchange papers, public documents, etc., may be forwarded to 
the same address. 


Financial Events and Possibilities. 

The chief interest regarding the new currency law 
still centers in the redemption system. Up to the 11th 
instant the offerings of national bank notes at the treas¬ 
ury amounted to $2,862,070. During the next week, or 
up to the 18th, inclusive, the offerings were $2,737,300, 
or about $450,000 a day on an average for six days. 
This was in spite of a treasury circular requesting 
banks to withhold currency for a time, as the machinery 
for assorting notes was not in working order. There has 
been some complaint that those who have sent on 
notes have not received even an acknowledgement of 
the amount offered for redemption. Undoubtedly this 
has somewhat retarded the process. At the present 
rate of redemption, the average time a bank-note 
would be in circulation before it would come home 
for redemption, would be one hundred and twenty- 
three weeks, or two years and four months. On the 
other hand, at the present rate, banks would be com¬ 
pelled wholly to replenish their five per cent, reserve in 
the treasury every six weeks, which is likely to be often- 
erthan they desire. These facts show two things: that 
the redemption system is not to be highly successful 
if it has gained its full momentum, and that the five 
per cent, required to be lodged in the treasury is insuf¬ 
ficient even for the slow process that has already be¬ 
gun. 

The treasurer has decided that the five per cent, re 
serve must originally be made in legal tenders, but 
that any call for additional amounts to make it good 
may be made with bank-notes. This is a very rea¬ 
sonable decision, inasmuch as it is simply equivalent 
to the banks sending on so much in bank notes for re¬ 
demption and then depositing the greenbacks received 
in exchange as a part of the reserve. Nevertheless it 
is easy to see that if all the banks send on notes for 
this purpose the treasury stock of greenbacks is very 
likely soon to be exhausted. 

Banks are still sending in legal tenders to redeem 
their bonds and take up their circulation. The amounts 
are not officially stated, as they should be, and we are 
therefore without the proper data for estimating the 
exact effect of this new feature of our banking laws. 
Nor are we told what amounts of currency are applied 
for by new banks. This, however, is of less consequence, 
as‘it appears that some banks apply for currency 
which they will not or cannot take, and thus prevent 
other banks in the same States from being organized. 
The amount applied for under the new law is stated 
by one correspondent at about three millions, but we 
do not know whether it is even approximately correct. 

There are no further developments as to the success 
of the new loan. • The value of the offer has been ac¬ 
tively canvassed, and Washington correspondents tele¬ 
graphed yesterday that many bids had been filed with the 
Secretary of the Treasury. Rumor has asserted that two 
or three “syndicates” of American bankers were form¬ 
ing to take large amounts, but these negotiations are 
necessarily kept as secret as possible. Next week the 
whole subject will be cleared up. 

The internal revenue receipts this year are looking 
well. Up to Saturday last they amounted to almost 
six millions, against $5,400,000 last year, a gain of more 
than ten per cent. The period covered was eighteen 
days,—not sufficient as a basis for any extensive de¬ 
ductions. 


Spirit of tlie Press. 

[New York Commercial Advertiser.] 

To return to the New Loan. Its political significance 
is that its negotiation is another step in removing all 
doubts as to the prompt and absolute redemption of 
the United States Five-twenties in gold. They are now 
all within the option of the Administration to be called 
in for reimbursement in gold. The holders will neither 
be asked to receive nor menaced with greenbacks in 
any possible contingency. The lower rate of bonds 
will be sold for gold and the gold applied to the pay¬ 
ment of the Five-twenties, and we confidently believe 
that if no mistake be made with the New Five Per 
Cent. Loan there will be no Five-twenties outstanding 
by the 4th of July, 1876, upon which the greenback 
issue can be pressed, and the glory of this vindication 
of the public faith by the removal of all pretext of 
Democratic repudiation will be due to the present Ad¬ 
ministration. 

[Chicago Times.] 

These bonds are promises to pay dollars, which are 
by law declared to be gold and silver coins of a certain 
weight and fineness. They are promises to pay these 
dollars, the time of payment not being specified, and 
all such promises are by law redeemable on demand. 
Is it not, then, dishonest to refuse to pay dollars for 
these greenbacks on demand? Is it not a violation of 
both the letter and the spirit of the contract? Does 
not the refusal to keep such promises imply that those 
who refuse have abandoned their self-respect and lost 
their integrity? Certainly it would so seem to any man 
who had not lost either his conscience or his reason. 

The unlimited shinplaster sort of repudiation cannot 
be defended as more respectable and honest than the 
5-2(Lgreenback sort, on the ground that the courts have 
approved of it. The courts have approved of the un¬ 
limited shinplaster mode of repudiation only as a war 
necessity. It was not even that. There can be no war 
necessity for legalizing the wholesale repudiation of 
private debts, so long as the debtors are unable to pay. 
But granting that the war necessity once existed, con¬ 
fessedly it no longer exists, and the inflation sort of 
repudiation has no sort of excuse. And even if the 
supposed necessity still existed, it would excuse public 
repudiation rather then private; it would excuse the 
repudiation of a part of the 5-20 bonds rather than a 
like part of all private debts. Government has no 
right to impair the value of any part of its obligations; 
but it is especially atrocious for a government to im¬ 
pair the value of such obligations as it has forced peo¬ 
ple to use as a measure of value, and to receive in pay¬ 
ment of debts due them. Of the two sorts of repudia- 
tors—the 5-20 repudiators, represented by the Indiana 
saurian convention, and the unlimited inflation repudia¬ 
tors, represented by The Inter-Ocean , the latter are 
vastly more dishonest, and are much farther advanced 
in the abandonment of self-respect and the loss of in¬ 
tegrity. 

[New York Express.] 

Those who have been clamoring so loudly for more 
capital and more banks, are simply without capital to 
enforce what they wish or claim. The country is now 
in that state when wind ceases to be substance and 
water money. This was the rule a year since and for 
some years before, but now while there is plenty of 


the banks, which will give an increased circulating me¬ 
dium of upward of $25,000,000. It legalizes the issue 
of about $33,000,000, (sic,) of legal tenders, issued 
during the panic, which it was contended by many the 
Secretary of the Treasury had no right to issue, and 
was a violation of the law, and he would have been 
compelled, if they had not passed said bill legalizing 
his act, to have again withdrawn from circulation, so 
that the passage of this bill did increase the circulating 
medium, but not to the extent that the people desired. 
This was, however, all they could do, simply because 
Bennett’s Cassar had dictated to Congress that he would 
not sign any bill which they might pass contrary to his 
wishes, .and Congress had to choose between two alter¬ 
natives, either to adjourn without doing anything, or 
pass this bill, which was the best they could obtain for 
the people under the circumstances. 


money and capital in the country, there must be some¬ 
thing to show for it. Where there is the right kind of 
security there is plenty of money. Beyond this, how¬ 
ever, there has been a great shrinkage in values, rep¬ 
resenting capital during the past year.- The great 
failures of last autumn knocked the bottom out of 


great deal of what was then called capital, especially 
in railroad stocks and bonds. Ever since the panic 
the country has been getting upon a hard-pan basis, 
and once there, every change must be an advance or 
improvement. 

[Shenandoah Herald.] 

What has been done? The $382,000,000 legal tender 
notes new in circulation, and $55,000,000 of the $80,- 
000,000 of national bank notes held by one section of 
the country more than it is entitled by ratio of popula¬ 
tion and wealth, is to be distributed among the States 
that have less than their ratio. By this means it is 
supposed that it will find its way to the West and South, 
and will ease those sections of the country financially. 

This bill is as it was intended, a perfect farce, and 
does not expand the currency one single dollar. The 
bankers and money shavers have triumphed, and the 
appeals of the business and working men have been 
set at defiance and their wants passed by, unheeded 
and unprovided for. 

[Pottsville Miner’s Journal.] 

The circulating medium has expanded under the bill 
that passed Congress, by lessening the reserves held by 


Scotch Banking for New England. 

BY EDWARD ATKINSON. 

Scotland has eleven banks and over eight hundred 
branches, or a banking office for each 4000 of her 3,- 
400,000 people; the capital of her banks is $45,500,000, 
and the average amount of deposits, all of which are 
upon interest, is $325,000,000,or nearly one hundred dol¬ 
lars for every man, woman, and child. We had on 
the first of May, 1874, 1978 banks and no branches, 
or a bank for each 20,000 of our 40,000,000 people, 
but our banks are much more concentrated in a few 
cities. The capital of our banks is $490,077,101, and 
the average deposit for the previous six months was 
$642,164,282, or only sixteen dollars per head. If our 
average deposit was in proportion to that of Scotland 
it would amount to $4,000,000,000 all of which would 
be employed in productive work. 

If New England possessed as widely diffused a bank¬ 
ing system as that of Scotland, it is not to be doubted 
that her hardy sons would be far more likely to remain 
at home and maintain the New England character 
upon her own hills and in her own valleys, rather than 
to emigrate to the fat but homesick prairies of the 
West. 

The area of New England that might be used for 
cultivation and grazing, leaving out the forests and 
mountain country of Maine and New Hampshire, would 
not be very different from that of Scotland, 31,000 
square miles; and the population of this habitable area 
is now about the same, or 3,400,000 people. It is 
doubtless true that the savings of the people of New 
England on deposit in banks are greater than those of 
the Scotch; the difference is in method. The depos¬ 
its of the working people of New England are in sav¬ 
ings-banks, those of the Scotch chiefly in commercial 
banks of deposit and discount. 

Let us consider the probable effect in New England 
of a system similar to that of Scotland, to wit, that 
there should be over eight hundred banking offices 
scattered about the land, or one to each four thousand 
people, where deposits could be made and discounts 
obtained.. The first effect would be that no one would 
keep money in the house or shop, but would daily de¬ 
posit every dollar for the sake even of a small rate of 
interest on the deposits. That a large aggregate de¬ 
posit could be thus gathered cannot be doubted. A 
well-established system of banking on the Scotch 
method would not only have saved many losses on 
poor investments, but would have been fruitful in great 
increase of production, and in preventing the decrease 
in farming industry. It is folly to talk of farming 
having ceased to be profitable in New England. The 
changes that have come call for more capital, and this 
the banks would have supplied; and more skill and 
intelligence, and these the habits of banking and the 
ensuing thrift would have called out .—August Atlantic. 


Official Republican Statement. 

The currency is in an abnormal condition and must 
be reformed. It is undoubtedly true that the Republi¬ 
can party is not agreed how to effect that reform; 
neither is the Democratic party. Neither party, as 
such, yet sees clearly the right way. But there are 
two reasons for believing that the Republican party 
rather than its rival can best treat the great question 
of the finance—first, as the former has hitherto found 
the true way through graver difficulties than this, so 
we believe it is more apt to find its way through this. 
Second, you have abundant proof that when Repub¬ 
licans discover the true way they will pursue it. That 
assurance has as yet not been given by the other par- 
ty. 

























82 


THE FINANCIAL RECORD. 


The Indiana Democracy. 

The principal political event of the past week, so 
far as the currency question is concerned, is the con¬ 
vention of Indiana Democrats on Wednesday, the 15th 
instant. Governor Hendricks presided and, on taking 
the chair, spoke at length. We extract that part of 
his speech relating to finance: 

The recent very serious disturbance of our finances 
and the consequent interruption of our commercial and 
manufacturing pursuits, and the partial suspension of 
the employment of labor, have arrested general and 
anxious attention; and I suppose you may regard it 
proper to express some views in respect to our National 
policy. Our paper money is necessarily confined in its 
circulation to our own country; for our foreign pur¬ 
chases and payments are required in coin. The latter 
is the universal and permanent standard of value, and 
it should be our policy to increase its supply until we 
reach a condition where specie payments may be safely 
resumed. In the meantime, the paper currency should 
be maintained in such quantity as will facilitate the 
business of the country, encourage legitimate enter¬ 
prise, and secure remunerative employment to labor, 
but not so increased as to cause its own depreciation, 
or to develop a reckless spirit of speculation and ad¬ 
venture. Surely a wise statesmanship may avoid the 
extreme of a contracted currency, cramping business, 
choking enterprise and paralyzing labor on the one 
hand, and of inflated or depreciated currency upon the 
other. I cannot say which would be the greater evil. 
They are the extremes of gluttony and starvation. 
Health and strength belong to neither. 

H we are to have a paper currency—and I believe 
all concede that our condition requires its continuance 
for some indefinite period—then I know of no rule or 
standard to determine its quantity but the demands of 
the legitimate business of the country. Our paper 
currency consists of Treasury notes declared by Con¬ 
gress to be lawful money, and National Bank notes. I 
am not in favor of the policy that proposes to retire 
the Treasury notes to make room for an increase of 
National Banks and their paper. The Treasury notes 
are the cheaper currency to the people, and command 
public confidence. They are not irredeemable, for 
their value they rest upon the pledge and confidence 
of the country. The relation between the holders and 
the Government is direct. The people are not request¬ 
ed to pay interest upon national bonds deposited as the 
basis of their security and value, as in the case of the 
bank notes. Passing everywhere and without ques¬ 
tion, they are favorite and popular currency. 

We desire to return to specie payments. It is a se¬ 
rious evil when there are commercial mediums of dif¬ 
ferent values: when one description of money is for 
one class and purpose, and another for a different class 
and purpose. We cannot too strongly express the im¬ 
portance of the policy that shall restore uniformity of 
value to all the money of the country, so that it shall 
be always and readily convertible. That gold and sil¬ 
ver are the real standard of value is a cherished dem¬ 
ocratic sentiment not now nor hereafter to be aban¬ 
doned. But I do not look to any arbitrary enactment 
of Congress ‘for a restoration of specie payments. 
Such an effort now would probably produce wide¬ 
spread commercial disaster. A Congressional declara¬ 
tion cannot make the paper currency equal to gold in 
value. It cannot make any bank note worth as much 
as your gold dollar. The business of the country 
alone can do that. When we find the coin of the 
country increasing, then we know that we are moving 
in the direction of specie payments. The important 
financial question is: How can we increase and make 
permanent our supply of gold? The reliable solution 
is by increasing our productions and thereby reducing 
our purchases and increasing our sales abroad. He 
can readily obtain money who produces more than he 
consumes of articles that are wanted in the market, 
and I suppose that is also true of communities and na¬ 
tions. 

How can the Republican party atone to the people 
for its evil policies which have driven gold from the 
country and rendered a return to specie payment more 
difficult, and made its postponement inevitable? That 
party has exerted all its powers to make our debt a 
foreign one, and for that purpose and to that end has 
established singular relations between our Government 
and a European Syndicate, or combination of banks, 
giving great advantage in the arrangement. Now, 
every pay-day large sums of gold are sent abroad to 
pay interest coupons, the red blood drawn from the 
veins and arteries of the country. I believe it would 
be better for the country to pay a fourth or a third 
larger per cent, upon our bonds to our own people than 
to foreign holders. Ireland was made poor by her 
landlords, who expended their rents abroad. Cheap 
Chinese labor eats at the vitals of our prosperity on 
the Pacific Coast so long as the wages are sent back in 
gold to China. The farmer grows poorer every year 
who returns no nourishment to his fields. 

Our foreign trade has been largely against us. The 
difference between our exports and imports has been 
supplied in interest-bearing securities and coin. This 
great and constant drain upon our gold has contributed 
to the depreciation of our paper currency. Six years 


ago, at the commencement of the gubernatorial con¬ 
test, I had occasion to speak upon this subject. I then 
said: “We can not meet one dollar of foreign indebt¬ 
edness with our paper currency, and therefore, when 
the balance of trade is against us, it is a constant drain 
upon our gold and silver. How long can we endure 
this without financial ruin? And when can we return 
to a specie basis, if the specie be constantly withdrawn? 
Our reliable remedy is in an increase of production, 
especially of those great staples that command the for¬ 
eign markets. Then the specie will flow to our shores 
in payment for our productions; then we will sell 
more than we buy; and then our financial difficulties 
will rapidly disappear and we will soon stand on a spe¬ 
cie basis.” 

An increase of twenty per cent, in the production of 
our great staples would turn the balance of trade in 
our favor and the current of gold toward our shores, 
and contribute to an early resumption of specie pay¬ 
ments more than any enactment of Congress. 

THE RESOLUTIONS. 

The following resolutions were adopted. A dispatch 
from Terre Haute says that they were drawn by “Dan 
Voorhees:” 

1. That we are in favor of the redemption of the five-twenty 
bonds in greenbacks, according to the law under which they 
were issued. 

2. We are in favor of the repeal of the law of March, 1869, 
which assumed to construe the law so as to make such bonds 
payable exclusively in gold. 

3. We are in favor of the repeal of the national banking 
law and the substitution of greenbacks for the national bank 
currency. 

4. We are in favor of a return to specie payments as soon as 
the business interests of the country will permit. 

5. We are in favor of such legislation from time to time, as 
will adjust the volume of currency to the commercial and in¬ 
dustrial wants of the community. 

THE PRESS ON THE PLATFORM. 

[Chicago Times.] 

The Pendletonian Bourbons of Indiana favor the 
redemption of 5-20 bonds in greenbacks, “according to 
the law under which they were issued.” If the vener¬ 
able saurians of Indiana will take the trouble to read 
the law under which the 5-20’s were issued, they will 
find that the greenbacks were made receivable, dollar 
for dollar, for the 5-20’s, but not a word will they find 
making the 5-20’s payable in greenbacks. Now, if the 
Indiana Pendletonians are willing to stand by the law, 
well and good. Let the greenbacks be funded in 5-20’s 
as the law provides, and in a year there will not be a 
greenback left wherewith to “redeem” the 5-20’s. It 
is superfluous, however, to make any proposals in this 
connection. Pendletonism was killed deader than a 
smelt in 1868, when the issue was fairly, made. The 
action of the Indiana saurians in attempting to resur¬ 
rect an issue that has been dead six years, and is now 
too thoroughly decomposed even to stink, simply proves 
that the Indiana saurians would never iearn anything 
even though they should live as long as the rocks 
wherein they are rooted, and the eternal hills where¬ 
with they are buttressed. 

[Dubuque Times.] 

No. 1 is open, bold, brazen Repudiation! It is a pol¬ 
icy inaugurated in 1867 by Geo. II. Pendleton, of Ohio, 
and was passed upon by the following presidential 
election, the verdict killing the scheme of repudiation 
and “Gentleman George” at the same time. Nowhere 
else since that time has this villainous doctrine found 
adherents. During the Rebellion the southern traitors 
would have precipitated such a shameless policy upon 
the non-rebel States if they had had the power. Jeff Da¬ 
vis inaugurated a kindred villainy of Repudiation in 
Mississippi, since which that repudiation State has been 
without credit and without recognition in the world’s 
markets. Mississippi, the Rebel Confederacy and In¬ 
diana constitute the Repudiation Trinity. Indiana 
Democrats are not content with a general declaration 
of repudiation; of breaking the pledged faith of the 
nation. Their second resolution particularly points 
out for repeal, the law of the country which legally 
and firmly established the credit and honor of the na¬ 
tion! The. third resolves against the national banks 
and in favor of greenback currency alone,—a policy 
which would indefinitely postpone the day of gold and 
silver—the “world’s currency”—into the unmeasured 
future. The fourth favors a return to specie pay¬ 
ment;—as Ensign Stebbins said of liquor prohibition, 
“I’m in favor of the Maine law, but agin its enforce¬ 
ment.” 

[Boston Post.] 

Both the platform and the proceedings of-the Demo¬ 
cratic State Convention of Indiana were too excellent 
and effective to deserve to have been qualified in re¬ 
spect to the former by the resolution declaring for 
“the redemption of five-twenty bonds in greenbacks, 
according to the law under which they were issued.” 
It is an unfortunate announcement of a preference 
which has no better warrant than the personal testi¬ 
mony and judgment of a Republican leader like Thad- 
deus Stevens. Even were the true interpretation of- 
the law as unequivocal for greenback resump¬ 
tion as it became by the subsequent act of 
1869, unequivocal for coin payment, the confi¬ 
dence of the world had settled on the latter as 
the implied pledge of the loan, and to disturb it would 
be the unsettling of the public credit, and therefore a 


national calamity. There is no question that this po¬ 
sition was taken by the Indiana Democracy in obedi¬ 
ence to what they believe to be the public sentiment 
around them, and it is said that on the part of the 
hard-money Democrats of that section there was a 
feeling of relief that the Convention contented itself 
with so comparatively conservative a declaration. It 
all comes down at last to the question of interpreta¬ 
tion for the law authorizing the issue of bonds, which 
the country has sufficiently answered for, it should 
seem, by compelling the passage of the explanatory 
law of March, 1869. But whatever is to be said of 
this unsound plank in the Democratic platform of In¬ 
diana, which otherwise advocates resumption as the 
basis of a sound currency, the Republican Congress 
that voted to legalize the unauthorized issue of twenty- 
six millions of greenbacks showed how it can be made 
impossible to redeem the five-twenties in any other 
mode than with the very paper it professed to abhor. 

[Albany Journal.] 

The Indiana Democratic platform is about as bad as 
bad can be. The Democrats of that State are evi¬ 
dently determined that if any buncombe popularity is 
to be made out of the “more money” cry—and Indiana 
is crazier with the inflation lunacy than any other 
State in the country—they will not let Senators Mor¬ 
ton and Pratt appropriate it all for the Republican 
party. They have, therefore, made their demand for 
more irredeemable currency so radical that the Re¬ 
publican convention cannot outdo, and will scarcely 
attempt to rival, it. They demand the redemption of 
the five-twenty bonds in greenbacks, and the with¬ 
drawal of the national bank notes, their places also to 
be taken by greenbacks. The first of these propo¬ 
sitions is Mr. Pendleton’s pet political hobby, upon 
which he hoped to ride into the Presidency in 1868. 
It is something very like larceny for his old rival, 
Hendricks, to thus attempt to steal it now. It is ob¬ 
vious that its practical result would be the wildest and 
most unlimited inflation. When the Republican con¬ 
vention meets, though we have no hope that it will be 
on the right side on the financial question, it is slight¬ 
ly consoling to reflect that it cannot, in any case, go 
more wildly astray than has the Democratic conven¬ 
tion. 

[Chicago Tribune.] 

Six years ago, the Democrats of Indiana rushed pell- 
mell into the Pendletonian scheme to issue greenbacks 
by the car-load, and take up all the bonds with them, 
and the Republicans then, having small faith in public 
honesty, adopted the same declaration of policy. 
Now, in 1874, we have the same discreditable perform¬ 
ance over again,except that the propositions have been 
divided; the Republicans under Morton insisting on an 
unlimited issue of paper and its consequent deprecia¬ 
tion to the lowest point, while the Democrats propose to 
force upon the public creditors this depreciated cur¬ 
rency in satisfaction of the bonds. While the platforms 
of both parties on this question are unworthy the re¬ 
spect or support of any decent citizen, we regard that 
of the Democrats as the more flagrant of the two. 
The Democratic party has been long in the minority, 
both in the State and in the nation. It had tried every 
device, including repudiation and greenback inflation, 
without success. The only policy open to it which 
had not been tried was honesty, and that policy it had 
not the wit to adopt. Its' Republican rival had pro¬ 
posed to water the currency, and authorize a partial 
repudiation of all the private debts of the country. 
The Democracy now proposed to add to that the re¬ 
pudiation of a part of the public debt. They had the 
opportunity of reasserting the ancient and honored 
creed that the only money in which wages should be 
paid was that which was worth 100 cents on the dol¬ 
lar the world over; that irredeemable paper money 
was always subject to fluctuations, and hence could 
never furnish an honest measure of values; and that 
the credit of the Government could never be estab¬ 
lished on a firm basis until its demand obligations 
were paid. Such a platform, however familiar to the 
Democrats of past times, would be new to most of the 
present generation; it would remind them of their 
Sunday-school lesson that “honesty is the best policy,” 
and it would appeal to the inherent integrity of every 
man in the State. It would be conspicuous among the 
political literature of the day, and would give assur¬ 
ance to the country that the Democratic party was 
true to the faith of the fathers wfio had adorned and 
signalized its history. But the party in Indiana was 
unequal to the occasion. It placed even a lower esti¬ 
mate upon popular intelligence and honesty than the 
Republican convention, and now the two parties enter 
the canvass each calling for popular support, on the 
ground that it has proposed j£ policy more flagitious 
than the other. 

[Cincinnati Enquirer.] 

The Democrats of Indiana held a meeting yester¬ 
day. It is proper to say, to begin with, that it was 
Indiana’s day. While patriotism and statesmanship 
alike command that the discussion of this question of 
currency, topmost though it be, shall be lifted out of 
sectionalism, it is impossible to forget or ignore the 
fact that upon the Democracy of Indiana devolved the 
responsibility of striking the key-note for the Democ¬ 
racy of four-fifths of the United States. 

The platform of our neighbors has smoothed the 













THE FINANCIAL RECORD. 


83 


path for their victorious chariot-wheels. They de¬ 
mand that the five-twenty bonds be redeemed in Uni¬ 
ted States notes as per contract; that the law of 1869 
making them payable in gold, contrary to contract and 
to the interests of the people, be repealed; that the 
National Bank law be repealed, and greenbacks be 
substituted for the National Bank notes; that the vol¬ 
ume of currency be adjusted to the wants of the coun¬ 
try, and, disarming all accusers who would lift the cry 
of “repudiation,” declare in favor of a return to spe¬ 
cie payments as soon as the business interests of the 
country will permit, and no sooner. The victory of 
the Democratic party in Indiana, by a large majority, 
is assured. They oppose a party which consists of a 
divided minority. The Republican leader in Indian¬ 
apolis and the Republican leader in Washington face in 
opposite directions. Morton and his followers really 
stand upon the Democratic platform, but Morton is 
compelled to fawn at the gates of the White House. 
Not so with his followers. They will accept his doc¬ 
trine and disregard his ticket. 

The action of the Indiana Democracy borrows sig¬ 
nificance from this fact: It is so completely in the line 
of the belief of the great bulk of the Democratic party 
that the Democracy of nearly thirty States.will echo 
its platform almost as involuntarily as the hill-side 
echoes the song in the moonlight. Emerson tells us 
that what the tender and poetic youth dreams to-day, 
and conjures up with inarticulate speech, is to-morrow 
the vociferated result of public opinion, and the day 
after is the charter of nations. It is quite true that 
the heresy of to-day becomes the gospel of to-morrow. 
It is six years and eleven months ago to a day that the 
Hon. George H. Pendleton made the first public an¬ 
nunciation of a financial doctrine almost identical with 
that which the Indiana Democracy declared yesterday. 
In a few months twenty-six States will have taken up 
the theory and fashioned it into a creed, and the un¬ 
ostentatious apostle and herald of the doctrine which 
is now at home in the mouths of all men can compla¬ 
cently rest in the assurance that the seed was not sown 
by the wayside, or on stony ground. 

THE PRESS ON HENDRICKS, 

[Buffalo Commercial Advertiser.] 

At the recent session of the Indiana Democratic 
convention Governor Hendricks took occasion to 
discuss at considerable length the national financial 
policy. As a matter of course he condemned the Re¬ 
publican party’s treatment of the finances; but in at¬ 
tempting to show what should be done he exhibited 
a remarkable ignorance of the subject in hand. He 
laid great stress on the necessity for increasing the 
domestic exports and for reducing the foreign imports. 
He also wanted all the gold retained in the country, so 
that the Government at some very remote period 
should be able to resume specie-payments safely. 
The Governor professed to be in favor of a hard- 
money basis, but argued against it all the time. Nev¬ 
ertheless the convention fully understood him, as it in¬ 
corporated a repudiation plank in its platform. 

Governor Hendricks is opposed to sending any gold 
abroad. He forgets that with us bullion is almost as 
much an article of merchandise as breadstuffs or cot¬ 
ton. From 1848 to 1874 the products of the western 
mines reached the enormous sum of 81,578,407,641. 
This bullion is sent abroad and sold, just as our wheat 
and corn is. To retain it all in this country would be 
the hight of folly. Hendricks may be a great finan¬ 
cier in Indiana, but when he is spread out all over the 
United States he is very thin. 

[Dubuque Times.] 

Indiana Democracy is peculiar. In no other State 
in the Union does it possess such provincial ear-marks. 
When compared with the Democracy of any or every 
other State, it is seen to be neither fish, flesh nor 
fowl, nor even yet good red herring. Hoosier Democ¬ 
racy is a Wabash ague in epaulettes and spurs. A 
large portion of its membership keep their business ac¬ 
counts as Rip Van Winkle did his whiskey score—chalk 
marks on a window shutter. The political aborigines 
held their State Convention on Wednesday last. Gov. 
Hendricks made a speech. In many respects it dif¬ 
fered so widely from the platform, afterwards adopted, 
he doubtless regretted having spoken. 

[Chicago Inter-Ocean.] 

The sobriquet of “Oleaginous,” so often applied to 
the Hon. Thomas A. Hendricks, of Indiana, seems 
more appropriate than ever after his speech before the 
Democratic Convention of Indiana. The address was 
carefully prepared, and its every word and sentence 
closely scrutinized. It was spliced in one place and 
amputated in another until it was considered, no doubt, 
the most remarkable effort of the kind ever produced. 
And taken as a whole, it is an astonishing production. 
In the concrete it thunders like Jove. In the abstract 
it cooes like a sucking dove. He starts straight at a 
proposition as if he would knock the vitals out of it at a 
bounce; but just before he hits it, his boulder turns to 
a bunch of down, and he caresses what he threatened 
to destroy. But in his effort to slip through the nar¬ 
rows and slide over the sand-bars of politics, Mr. 
Hendricks is not altogether successful. He does well; 
he does better than most men could do; but his lubri¬ 
cated breeches catch on a jutting point here and there, 
and not to put too fine a point upon it, they are rent. 

The financial question was another troublesome ob¬ 


struction. _ On this subject the wily Governor reminds 
us of a species of steam vessels called “double-enders.” 
They move forward or backward with equal facility. 
With a full head of steam on, Hendricks struck for 
greenbacks. Interpreted by the platform, he struck 
for them more completely and lavishly than any other 
prominent• public man. But just before he reached 
the grand shoal he stopped, and began moving the 
other way fully as rapidly. He sailed over and waved 
his banner to the expansionists of the West, but, with¬ 
out stopping, moved swiftly to the bullionists of the 
East, and fired a big gun to let them see that his flag 
of specie payments was flying at the main. Having 
done this, he went meandering about until he anchored 
finally with one end of his boat in a limitless sea of 
greenbacks, while the other was grinding on the reefs 
of specie resumption. 

The speech is, in brief, a loud bid for the Presidency. 
It is the effort of one whose accomplishments as a 
trimmer and a demagogue of the more respectable and, 
therefore, more dangerous, class are positively unri¬ 
valed. We had hoped that the day of double-dealing 
and deception had passed, but it appears that this gen¬ 
tleman has yet confidence in his ability to humbug 
and deceive the voters of Indiana after the old fashion. 
We shall see whether his calculations are well. made. 

[Chicago Tribune.] 

The two most striking features of the proceedings 
were the speech of Gov. Hendricks and the plat¬ 
form of the Convention. In general, these 
two documents were of the same tenor, except that the 
Governor omitted a direct expression of judgment on 
one point in the platform, and the platform is inno¬ 
cent of a fallacy in support of which Gov. Hendricks 
labored earnestly. Thus the platform declares “that 
we are in favor of the redemption of the 5-20 bonds in 
greenbacks, according to the law under which they 
were issued;” and “in favor of the repeal of the law 
of March, 1869, which assumed to construe the law so 
as to make such bonds payable exclusively in gold.” 
Mr. Hendricks, in his speech, though discussing the 
questions of finance and the currency, avoided all ref¬ 
erences to the redemption of the bonds in greenbacks. 
He left the square endorsement of repudiation to the 
Convention, and restricted himself to the expression of 
an opinion that the present currency is not irredeem¬ 
able. On the other hand, the Convention declared in 
favor of a tariff for revenue, while Gov. Hendricks 
expressed the opinion that all our financial troubles, 
and especially the depreciation of our currency, were 
due to the scarcity of gold caused by the fact that the 
balance of trade was always against us, to pay which 
“the red blood flows fi-om the veins and arteries of the 
country.” With all its recklessness and stupidity, 
the Convention was not guilty of uttering sncli prepos¬ 
terous nonsense as that. 

[Chicago Times.] 

' The reporter introduces Mr.' Thomas A. Hendricks’ 
speech before the Indiana Bourbon repudiation con¬ 
vention on Wednesday with the remark that “Gov. 
Hendricks bowed gracefully, and, with his usual win¬ 
some smile, said,” etc. Whence it is to be inferred 
that Saint Schuyler is not the only Indiana politician 
who boasts a “usual winsome smile,” and knows how 
to invest it to good advantage when offices are going 
about seeking men. His smile on the late occasion 
may have been excited by a rapid mental survey of 
the preposterous things he was about to utter, and of 
the guileless simplicity which the utterance of those 
things presupposed as characteristic of the persons he 
was about to address. If so, his usual smile must have 
been more than usually childlike and bland, since not 
even Mr. Hendricks has often emptied himself of such 
a mess of incoherent trash as that wherewith he re¬ 
galed the ears of the Hoosier Bourbons in grand coun¬ 
cil assembled. 

Beginning with a general exhortation to the II. B.’s 
to gird up their loins and buckle on their armor, and 
go in as if the foemen were worthy of their steel, 
Mr. Hendricks soon dismissed that rather stale and 
unsuggestive topic, and took up another upon 
which it seems possible for politicians to talk unmiti¬ 
gated nonsense forever and forever,’to wit, the cur¬ 
rency. And it must be confessed that Mr. Hendricks 
succeeded even better than most politicians have done 
in making conspicuous- his mediseval ignorance of the 
whole subject of political economy. Starting out 
with an allusion to the prostration of industry which 
followed the panic, he immediately proceeded to talk 
about paper money as though an insufficiency of that 
article was undeniably and as a mere matter of course 
the cause of the prostration, and as though an insuffi¬ 
ciency of circulating capital was not for a moment to be 
thought of in this connection. A man who has occu¬ 
pied a seat in the United States Senate, and helped 
make laws for forty millions of people, ought to be 
ashamed to utter such antiquated and unmitigated 
twaddle. 

Inflationists’ Column. 

THE GOLD BASIS HUMBUG. 

[Pottsville Journal.] 

We all know that it is the want of sufficient curren¬ 
cy, or the curtailment of the same, that creates panics, 
and always results in a further curtailment, which in¬ 


creases the ruin that follows. But with a paper cur¬ 
rency at home, based on the wealth of the country, 
our circulating medium would not diminish to a ruin¬ 
ous extent at home, and being, unconvertible on de¬ 
mand, it could not be diminished even by excessive 
importations, because it could not be sent abroad like 
gold, for every dollar of which sent out of the country 
diminishes our circulating medium at home to that ex¬ 
tent. 

Such a Government currency, based on the wealth 
of the country in the proportion of 81 in paper to §37 
of the wealth of the country would be better than gold, 
and more convenient for home use, and would circu¬ 
late with gold if the people desired gold. With the 
balance of trade in our favor, which it ought to be and 
would be if we had intelligent law makers, no person 
would care about gold, and it would be absolutely less 
valuable for business purposes than our Government 
paper currency, which is so much more convenient. 

We hear a great deal of prating about the plighted 
faith of the country, and the absolute necessity of 
having a gold basis for our currency in order to trade 
with foreign nations. We have had an exclusive paper 
currency since 1862, and our foreign commerce has 
been larger, with an exclusive paper currency, than it 
even was before, and than it would be now if we had 
a currency convertible on demand in gold. The idea 
of a gold basis was imported from Europe. Our Gov¬ 
ernment is entirely different from European Govern¬ 
ments, and we are gradually cutting loose from the 
worn-out ideas inculcated from the despotisms of Eu¬ 
rope, and they are also beginning to learn from us, 
and all the friends of Republicanism in Europe are 
copying after us—it is therefore time that our people 
should cut loose from these old and pernicious policies 
which carry ruin and desolation throughout every 
country where such a policy exists, as a natural conse¬ 
quence, and enable the Shylocks and money changers 
to fatten on the earnings of the producers. We must 
repudiate these ideas of the old-fogy Bourbon bullion¬ 
ists and money changers imported from abroad, and on 
which they have run so long that all their ideas have 
congealed into one word, which they repeat like a poll- 
parrot by note—Gold! Gold !! GOLD!!! 

There is no Government existing that has a paper 
currency convertible into gold on demand that could 
redeem it on presentation; and when it is presented in 
large quantities they are compelled to violate the law. 
Therefore to issue a currency on such a pledge, 
which they know cannot be performed without ruining 
the whole community, is not only a base fraud on the 
people, but a deliberate lie, and is disgraceful to the 
Government that does it. If an individual were to do 
such an act deliberately he would be guilty of an in¬ 
dictable offense, and sent to the penitentiary. This is 
the “plighted faith” which the money-changers and 
money-lenders are always harping about, and which is 
a disgrace to any Government guilty of doing it. 

[Cincinnati Times.] 

It will probably come to be understood in due time 
that the people of Ohio, of both parties, are opposed 
to a contraction of the currency. 

[Cincinnati Enquirer.] 

Some such understanding as this is - likely to be 
spread abroad in the land, we confess. Still further, 
“the people of Ohio” of one party, in which we are 
humble stock-holders, are not only “opposed to a con¬ 
traction of the currency,” but are in favor of an in¬ 
crease thereof. The people of that party desire to 
say so on the 26th of August, and will do so if their 
Convention is not “manipulated,” and if its character 
as a representative Convention is not perverted in the 
interest of money and a Senator. But the Republi¬ 
cans have a President and a Senator and a band of 
bond-holders to prevent them from going so far 
as that in the interests of the people. 

[Philadelphia Press.] 

The financial declarations of the Democratic Con¬ 
vention of Indiana, although they include the repudia¬ 
tion heresy, are not lacking in wisdom. That State is 
almost purely an agricultural one, and the convention 
it is to be presumed, was largely composed of farmers, 
and it expressed the opinions and desires of that rul¬ 
ing class. Like every other convention, no matter 
whether it be Democratic or Republican, that has 
been held in the producing section since the issue was 
squarely made in Congress and by the veto message, 
the gathering of Indiana Democrats was unequivocal in 
its demand for an expansive currency and for a post¬ 
ponement of the resumption of specie payments until a 
day when the change can be made easily and without 
convulsing the business of the country. It is more 
than probable that the very large majority which the 
expansionists have in the present Congress will be in¬ 
creased in the next body which meets at Washington, 
and that the legislation of the last session, which was 
at best but temporary, will be supplemented by the 
issuing of bonds bearing a low rate of interest in cur¬ 
rency, and made interconvertible with greenbacks so 
as to absorb all excess of notes’when they are not in 
active demand, and vice versa. This much done, and 
we will have a basis upon which business operations 
may proceed, as well as a means of producing a pros¬ 
perity which will prepare us for the resumption of spe¬ 
cie payments in 1878. 










^mmcan. $tum 

5 Pemberton Square, Room 21. 

Boston, Jolt 24, 1874. 


SPECIAL ANNOUNCEMENT. 

The Sixth Number of the Journal of Social Science, published by Hurd & Houghton, Riverside Press, Cambridge, and No. 3 Astor Place, New 
York, will contain a brief report of the General Meeting at New York, with about half the papers read there printed in full. Among the papers in 
this number will be, 

The Address of the President of the Association, Geohoe William Curtis, Esq., of New York. 

The Report of the Secretary, F. B. Sanborn, of Concord, Mass., on The Work of Social Science in the United States. 

The Paper of G. Bradford, Esq., of Boston, on Financial Administration; that of David A. Wells, Esq., of Norwich, Conn., on Rational 
Principles of Taxation; that of Willard C. Flaqo, Esq., of Moro, Ill., on The Farmers’ Movement in the Western States; that of G. G. Hub- 
babd, Esq., of Cambridge, on American Railroads; that of Prof. Peirce, on Ocean Lanes for Steamship Navigation; that of Z. R. Brockwat, Esq., of 
Detroit, on The Reformation of Prisoners; that of Dr. E. M. Gallacdet, of Washington, on The National Deaf-Mute College; that of Georoe T. 
Angell, Esq., of Boston, on The Protection of Animals; and the Financial Report and Discussion. 

There will also be included in this number the full proceedings ot the Conference of Boards of Charities, with the papers read thereat, and 
the report of the Department of Social Economy on Pauperism in New York, with the remarks of Dr. John Hall,'Dr. Bishop and others concern¬ 
ing it. The paper of President White, of Cornell University, on The Relation of the State and National Governments to Advanced Education, will be 
deferred to the Seventh number. Subscriptions to the Journal will be received either by the publishers or by the Secretary of the Association. 
The number will contain 200 pages and will be sold for One Dollar. Previous numbers of the Journal of Social Science can be obtained of Messrs. 
Hurd & Houghton, at $1.50 each. 

The rest of the papers read at New York will be printed in the Seventh number, to be issued in September, and among these will be Dr. Wool- 
sey's Paper on International Law, the papers on Sanitary Subjects, and President White’s Paper. The Sixth number will be issued about July 30, 
and the Seventh number in the latter part of September. A list of the officers and members of the Association will appear in connection with the Re¬ 
port of the New York meeting. 

. GEORGE WILLIAM CURTIS, President, 

F B. SANBORN, Secretart. 





FINANCIAL RECORD. 

“WE NEED ONE THING BESIDES MORE MONEY, AND THAT IS BETTER MONEY .’'-Senator Each. Chandler. 


VOL. I. 


FRIDAY, JULY 31, 1874. 


NO. 26 


The Finacial Record will be continued until further no¬ 
tice, and will be sent free of postage, to all persons who will re¬ 
mit 50 cents to the publishers. All editors who receive it are 
invited to send their papers in exchange. It will no longer be 
ublished by the American Social Science Association, 
ut for the present, as heretofore, communications respecting 
it may be addressed to the Secretary of the Association, F. B. 
Sanborn, No. 5 Pemberton Square, (Room 21,) Boston; and all 
exchange papers, public documents, etc., may be forwarded to 
the same address. 

Tricks that are Vain. 

The politicians are at their old tricks. When a new 
issue comes before the people it is a matter of certain¬ 
ty that one of two distinct courses will be pursued; 
and it can be foretold unerringly which course it will 
be. Last year the question of cheap transportation 
came up. The anti-railroad movement was at once 
enormously popular. A new party rose almost as by 
magic and promised to sweep everything before it. 
The politicians on both sides thought they saw an op¬ 
portunity to make capital, and they hastened'to incor¬ 
porate in their platforms the most extreme “granger” 
principles. In Iowa the happy spectacle was exhibited 
of two old parties and one new one contending for 
the mastery on the transportation question, and each 
claiming to be more radical on that issue than either 
of the others. It was a beautiful example of noble 
emulation, but as nobody believed in the sincerity of 
anybody else, and as every one was exulting over the 
skill with which the rest of the world was deceived by 
his own party, the net gain to any party was hardly 
worth the sacrifice of principle involved. 

This year we see the other course followed. A direct 
issue is made between two opposite currency theories. 
On the one side are the experience of the world for hun¬ 
dreds of years, ever since paper money was invented; 
a system of economical science that defies the most 
careful examination; a body of theory which has 
been abundantly proved in practice. On the other 
side is a wild and insane doctrine, disproved by all ex¬ 
perience, born in excitement and nursed by a party of 
demagogues. The politicians are placed in this dilem¬ 
ma: They know that experience has told the truth, 
but they dare not tell the demagogues they are knaves, 
and their followers that they are idiots. Consequently 
they try to adopt a course that will satisfy both par¬ 
ties,and as usual they satisfy neither. In carefully word¬ 
ed resolutions they pronounce for specie payments and 
for a policy that if continued would postpone specie 
payments forever. They want hard money—when it 
is possible. Meantime they want more paper money. 
Here again all parties are in apparent agreement ex¬ 
cepting only the roaring hoosiers who never want to 
see a gold piece bearing the American figure of lib¬ 
erty again. The resolutions are substantially alike. 
The Indiana republican and the Indiana democrat 
stand on the same platform, facing each other, with feet 
very wide apart, one resting on the specie basis 
plank, the other on the inflation plank. Neither can 
make a very good fight in such a position, but there 
they stand, a spectacle for gods and men. 

Surely this condition of affairs cannot last. On every 
new i&ue the party leaders forget that the people are 
not all ignorant fools. The party that wins is that 
which takes the earliest and the strongest ground on 
the side of common sense and justice. It was so 
in the slavery contest, and it will be so again 
in this question of the currency. It is notorious 
that nearly all the leaders of the inflationist party, 
and particularly the Hon. O. P. Morton, held up to 
within eight months views diametrically opposite from 
those they now profess. They knew they were right 
then, they know they are wrong now. The prospect 
of temporary gain has done all the mischief with them. 
But the fate of men who rush to the head of a party 
wandering in the wrong direction is instructive, and 
that fate will be theirs. 


The New Loan. 

The time has come to tell in a connected form the 
story of Mr. Bristow’s disposal of the remaining $179,- 
000,000 of the five per cent, bonds authorized by act 
of Congress. 

Prior to the beginning of the present month, Mr. 
Bristow had received offers for portions of this loan 
from two rival syndicates amounting together to one 
hundred millions. Not caring to accept either until 
he had made a public offer of the bonds, and not wish¬ 
ing to prefer either to the other, he first rejected both 
and then issued a circular on the 2nd of July, inviting 
bids for the whole or any part of the loan, which he 
subsequently explained could not be disposed of for 
less than par and interest accrued up to the time of 
the expiration of the call for five-twenties to be re¬ 
deemed, that is for three months. With the discus¬ 
sion in the public press as to this method of procedure 
we have now nothing to do. Three weeks were given 
for filing bids, and the time expired on the 23d. 

The bids divide themselves into four classes. (1) 
bids at (or above) par and interest, for bonds for invest¬ 
ment ; (2) similar bids by bankers for bonds to be sold; 
(3) bids at or below par and interest, less a commission 
varying from 1-4 to 3-8 per cent.; (4) a syndicate bid 
by a combination of both the parties whose offers were 
rejected in June. All bids of the first and second 
classes were accepted, as soon as Mr. Bristow had con¬ 
ferred with the President at Long Branch. The ag¬ 
gregate amount of these bids was $10,118,550, of which 
$3,500,000 was for reselling, and the rest, so far as is 
known, for investment. All the bids of the third class 
were at once rejected. They amounted to about thir¬ 
ty millions, including one of the State of New York 
for three millions. The syndicate bid was neither ac¬ 
cepted nor rejected at first. This offer was for $55,- 
000,000 “firm,” that is unconditionally and at once, 
on the terms offered by the Treasury, with the option 
of calling for the whole or any part of the rest at any 
time within twelve months. But the bidders also stip¬ 
ulated that no other speculative bid should be enter¬ 
tained. 

Negotiations were however opened at once between 
the Secretary and the bidders. It may be mentioned 
that the syndicate consists of the German firm of the 
Messrs. Seligman, the Rothschilds, August Belmont & 
Co., and the First National Bank of New York. A 
few million dollars of speculative bids having been 
accepted, the offer of the syndicate could not be ac¬ 
cepted entire; and the government desired that the 
twelve months’ option should be shortened. The cor¬ 
respondence between the different members of the 
syndicate was necessarily carried on by cable, and 
consumed several days. The syndicate reduced its 
“firm” bid by the amount awarded to other parties, 
and finally consented to shortening the time of option 
for calling for the rest of the loan, to six months. On 
Tuesday, the completion of the negotiation was an¬ 
nounced. The result is that, altogether, fifty-five mil¬ 
lions of the loan are disposed of absolutely and the 
syndicate has exclusive rights to call within the next 
six months for as much more as it pleases. The terms 
are such that the rate of interest on the face value of 
all the debt refunded will be reduced by one per cent, 
without even a momentary increase of the aggregate 
of the debt. 

There has been a great deal of criticism the past 
week on the secresy observed by the Secretary in re¬ 
lation to bids. When the time came for opening them, 
the operation was conducted in private, and on its 
completion Mr. Bristow took a schedule of the offers 
and posted off to Long Branch to confer with the 
President. There does not seem to have been any in¬ 
jury done to anybody by the failure to take the gener¬ 


al public into the confidence of the administration, and 
perhaps in view of the delicacy and magnitude of the 
negotiations it was quite as well that the business 
should have been privately transacted. The final re¬ 
sult is wholly satisfactory, since home investors have 
had all the opportunity they could desire to take the 
new fives, and a way has been found for disposing of a 
great part, and perhaps the whole of the new loan. 


Mr. McCulloch’s Views. 

Mr. McCulloch, Secretary of the Treasury in Andrew 
Johnson’s time, has lately returned from Europe to 
his native Indiana, and has been interviewed by a 
newspaper reporter who thus catechised him about 
the new currency bill: 

Reporter—What do you think, Mr. McCulloch, of 
the new financial bill and its effect upon the country? 

Mr. McCulloch—My opinion is that the bill will have 
very little effect upon the business of the country. It 
is a compromise measure, and certainly not a step 
toward specie payments, while it accomplishes very lit¬ 
tle if anything in the opposite direction. 

R.—You favor, I believe, the resumption of specie 
payments as soon as practicable? 

Mr. McC.—I do; but I believe the country neglected 
the best opportunity she has had to accomplish re¬ 
sumption. 

R.—When was that? 

Mr. McC.—Directly after the close of the war. It 
was, I believe, in the winter of 1865-66 that I sent a 
communication to Congress recommending the adop¬ 
tion of a policy which would lead to early resumption; 
Congress passed a resolution, I think, in December, 
1866, indorsing my views, and I still think it would 
have been better if the policy then suggested had been 
carried out. 

R.—What policy did you recommend? 

Mr. McC.—I did not favor the sudden withdrawal of 
a large amount of currency, or any violent measure 
which would tend to disarrange the business of the 
country. I had $1,100,000,000 or $1,200,000,000 of 
short time paper about to mature, which it would have 
been difficult to provide for had there been any inter¬ 
ruption to the regular business of the country. I then 
believed, and still believe, there were certain seasons 
of the year at which the volume of currency could be 
diminished without affecting general interests. I fa¬ 
vored a policy which would have gradually, but sure¬ 
ly, appreciated the value of the currency and bring 
things nearer a solid basis. The only class who would 
have felt this measure to any extent was the debtor 
class, and, as we owe more now than then, that was 
the favorable moment. 

R.—What would you recommend as the best policy 
to pursue at present? 

Mr. McC.—I do not think much legislation advisa¬ 
ble at present. I believe in doing everything to ap¬ 
preciate the value of the currency by encouraging in¬ 
dustry, discouraging extravagance and speculation, 
and inducing a return of business matters to a normal 
and healthy basis. 

I believe that our country ought to be the creditor 
and not the debtor nation. With our magnificent re¬ 
sources, our immense productions, and our almost un¬ 
limited possibilities, our exports should exceed our 
imports. Wise policy will soon bring this about with¬ 
out the intercession of the unjust tariff, and when this 
state of affairs is brought about bullion will flow into 
the country, and specie payment will be an easy mat¬ 
ter. 

An Indiana Democrat’s Plea for Honest 
Money. 

[From the speech of Hon. M. C. Kerr at Seymour, (Ind.,) July 

1, 1874.] 

Upon being nominated for Congress, in the New Al¬ 
bany district of Indiana, Mr. Kerr, a Democrat who 
formerly represented that district, made a speech to 
the convention, in which he said many things at vari¬ 
ance with the party platform since adopted at Indian¬ 
apolis. We copy some parts of the speech: 

A SOUND CURRENCY. 

The most vitally important subject of practical 
statesmanship now demanding solution in our country 
is the currency. It is not a question of the payment of 
bonds; it is not a sectional question; it is not a ques¬ 
tion that should arouse passion; it can never be set- 



















8G 


THE FINANCIAL RECORD. 


tied wisely except under the guidance of cool reason, 
without unfraternal bitterness, and upon the principles 
indicated by the universal experience of commercial 
nations. The vast importance of its right settlement 
no man can estimate, for the currency of a country di¬ 
rectly and most materially affects almost every interest 
of the nation and the people, every effort of labor, every 
reward of toil, the success of every enterprise, and the 
maintenance of both private and public morals. In all 
respects, the great subject was always fully understood 
and appreciated by all the fathers and founders of our 
institutions, and by almost all our rulers prior to 1861. 
This is most impressively and honorably true of that 
great party in whose name we are assembled here to¬ 
day, because, during its long, wise, prosperous, and glo¬ 
rious government of our country, it never for a year or 
a day, in peace or war, in prosperity or adversity, suf¬ 
fered the currency to be torn from its only safe and 
sure anchorage in the principles of the Constitution, 
the accepted currency of the world’s commerce, the sol¬ 
id enduring basis of gold and silver. There never was, 
and never can be, a good national currency that does 
not rest upon the sure foundation of intrinsic value, of 
money whose value is fixed by the labor it costs to 
produce it; of money created under the injunction “that 
in the sweat of thy face slialt eat thy bread.” Tull o 
the convictions, wise in the then past experience of the 
world, and faithful to duty, our forefathers imbedded 
these principles in our constitution, and cherished 
the fond hope that they had thereby forever secured 
their posterity against the evils of an irredeemable 
paper currency. They declared in the constitution 
that “no State shall make anything but gold and silver 
coin a tender in payment of debts.” That is our eon- 
situtional basis, and it precisely coincides with the con¬ 
clusions of universal experience, and of science, and of 
sound morality and natural law. And that wise pro¬ 
hibition, in its true intent, spirit and purpose, applies 
as well to Congress as to the States. And so, prior to 
1861, it was construed by the common judgment of 
the country, by Jefferson, Madison, Jackson, Webster, 
Clay, and all our great statesmen and rulers. So it 
should be construed now, and must be in the future be¬ 
fore our financial safety can be fully re-established. 
So it would be now but for the bad statesmanship and 
great wrong of the Republican party. 

EXPERIENCE OF FOREIGN NATIONS. 

For twelve years our country and people have floun¬ 
dered on under the evils and burdens of an irredeem¬ 
able and depreciated currency. This is discreditable 
to American statesmanship. Great Britain, with a 
population of only 19,000,000, struggling under a na¬ 
tional debt of over ><4,500,000,000 restored specie pay¬ 
ment in 1821, in less than six jrears after the last gun 
was fired on the battle field of Waterloo, which closed 
her eighteen years of bloody war with France and other 
nations ot the Continent. France in less than five 
years after the conclusion of the Franco-Prussian war, 
under national defeat and humiliation, with her insti¬ 
tutions greatly unsettled, suffering from the heavy loss¬ 
es of the bloody and disastrous war, with a dismem¬ 
bered territory, and a population of only 37,000,000, 
staggering under the burdens of a frightful public 
debt of §5,500,000,000, has restored specie payments, 
and made her currency equal to gold and silver. Ger¬ 
many did not suffer any suspension of specie payments 
to take place during her recent war. Wise and hon¬ 
est statesmanship could have restored ours years ago. 

DEPRECIATED CURRENCY. 

The pivot points in our present financial situation 
are the facts that our currency is now depreciated, and 
that the precious metals have ceased to be a circulat¬ 
ing medium, and have chiefly left our country. It is 
unquestionably true that the extent of the actual de¬ 
preciation of our currency is greater than the differ¬ 
ence between it and gold. The purchasing power of 
an inconvertible currency is the true test of its near¬ 
ness to coin. The present nominal depreciation is 12 
per cent., but a restoration of specie payments, brought 
about gradually, and without shock, would increase 
the purchasing power of our currency at least 25 to 40 
per cent. This would result from the fact that, under a 
currency equivalent to coin, the cost of production 
reaches its lowest point, the power of banks, corpora¬ 
tions, speculators, stock-jobbers and gamblers, to tam¬ 
per with the currency also reaches its lowest point, the 
standard of value becomes fixed and honest, and the 
tricks of traders and dealers in adding extra profits at 
every turn to protect themselves against the uncertain 
and fluctuating value of the paper currency loose their 
excuse and the result is, and this is the experience of 
our own country and every other nation, that the peo¬ 
ple,the honest industries, and especially the tillers of the 
soil, and those who live by the wages of daily labor, 
and the poor become more prosperous, more content, 
are better rewarded, better paid relatively, they 
can obtain more of the necessaries and comforts of 
life for what they earn, and are infinitely less at the 
mercy of capital, money manipulators, and gamblers 
of everj r sort. 

HOW THE PRODUCER IS SWINDLED. 

The facts never to be forgotten are that our curren¬ 
cy is now depreciated, and that therefore, of necessity [ 


prices are inflated, and that, by the added and inevit¬ 
able effects of dishonest and oppressive tariffs, impos¬ 
ed for “protection”—not revenue—prices are still fur¬ 
ther inflated, and by the joint effects of these causes 
coin is driven from the country and from all the com¬ 
mon uses of the people; for it is the experience of 
mankind and the law of money, that* when commodi¬ 
ties are high, and the currency is inconvertible, the 
coin is exported to the countries where prices are low; 
the poorer and less valuable cunency always drives 
out the better; and that every addition to an already 
depreciated currency has the inexorable effect of in¬ 
creasing the depreciation of the whole in proportion to 
the addition, and of inflating prices correspondingly, 
and more money is thereby required to carry on the 
same amount of business and it costs more money to 
live, and every man who lives on the interest of his 
money, in order to live as well, must raise his rates of 
interest in proportion to the depreciation of the value 
or purchasing power of money, and this is verified by 
experience for a century past. The inflation of prices 
at home naturally invites cheaper merchandise from 
abroad, increases importations, which must be paid 
for in specie. Thus, while a protective tariff and a 
depreciated currency exclude the products of Ameri¬ 
can manufacture from foreign markets, they encour¬ 
age increased importations of the cheaper manufac¬ 
tures of other nations. Therefore, during the last fis¬ 
cal year there were exported of the products of Amer¬ 
ican handicraft, less than §70,000,000 out of a 
total exportation of over §649,000,000, because the 
inflating effect of a depreciated currency and of 
a high protective tariff is felt in its fullest pow¬ 
er upon such products. But during the same 
year we imported of the cheaper products of for¬ 
eign handicraft at least §500,000,000, out of a total 
importation of over §684,000,000. That is a sad 
showing for the bounty-fed protectionists of our 
country after twelve years of the most exhorbitant 
protective duties ever enacted by any government in 
the interests of its favored classes. On the other hand 
in that year, there was exported from our country, of 
the unprotected staple products of American agricul¬ 
ture, over §440,000,000. These vast products, more than 
any others of the country, are beyond the reach of 
benefit from inflation, or protection, by depreciated 
currency or high tariffs. It is a law of commerce that 
the prices of the great staples of a country, both at 
home and abroad, are determined in the foreign 
markets where surplusses are sold. The prices of 
American cotton, tobacco, wheat and other staples are 
all fixed in those markets under the operation of this 
law, and not in our home markets. The currency of 
all these foreign markets is gold and silver. Thus 
some of the greatest interests of our country have 
their values measured by the standard of gold and sil¬ 
ver, while others are measued by the standard of ir¬ 
redeemable and depreciated paper. Thereby the 
farmers are robbed. They sell their great staples on 
the basis of gold and buy on the basis of depre¬ 
ciated paper. They generally sell at wholesale 
prices, and buy at retail prices, so that, even if their 
products are ever enhanced to any amount, those of 
the protected manufacturer are advanced from two 
to four times as much by the influence of currency 
and tariff inflation. Above all men in our country, 
therefore, the agriculturists are supremely interested 
to have a currency as good as the best, based on coin, 
so that they may buy and sell by the some standard, at 
home and abroad, and that all the citizens shall be 
treated alike. 

Iam driven, therefore, by the experience of the past, 
the teachings and examples of the fathers, and the in¬ 
exorable laws of finance, trade and commerce, to be¬ 
lieve that any inflation of an irredeemable currency is 
an honest remedy for nothing, and can only render a 
restoration of true currency more difficult and more 
remote. Inflation only makes cheap money cheaper, 
and prices measured by it higher, and creates a con¬ 
stantly recurring demand for more money. Mr. Web¬ 
ster said many years ago, and what he said is as true 
to-day as it was then, that “Of all the devices invent¬ 
ed by the wit of man to fertilize the rich man’s field 
with the sweat of the poor man’s brow, irredeemable 
paper money is the most effectual.” In 1831, Thom¬ 
as H. Benton, a great statesman and incorruptible 
Democrat, said: “If I were going to establish a work¬ 
ing man’s party, it should be on the basis of hard 
money—a hard money party against a paper party. 
Paper money tends to aggravate the inequalities of 
fortunes, to make the rich richer, and the poor poorer, 
to multiply nabobs and paupers.” 

THE CURRENCY OF COMMERCE. 

It is the fixed and irreversible judgment of mankind 
that the currency of commerce shall be gold and silver. 
It will accept no inferior currency. No great nation 
can do so without incalculable loss at home, constant 
disadvantage in its commercial competition with other 
nations, and the sacrifice of the most valuable oppor¬ 
tunities for prosperous and profitable international 
trade. Our rank as a commercial nation will be infe¬ 
rior, our commerce crippled, our cost of production 
I too high, and our domestic values inflated, until we 


can regain for ourselves the currency of commerce. 
You may convert every bond the country owes into 
greenbacks, make file government a generous lender 
to all comers, flood the country with promises as num¬ 
erous as the autumn leaves, and after all, your paper 
currency, like all other values, must-shbmit f-othc test¬ 
ed by the standard of gold and silver. There is nc^ es¬ 
cape from this law. It pervades the land ami tfc-sfef. 
wherever commerce has a pathway and civilization-, 
has organized exchanges. It is not in the grower of 
government by the inflation of the currency to increase 
values, but only prices are thereby increased. Quarrel 
with these laws if you will, but^you cannot change or 
suspend them. 

Capital cannot be made by-running a printing press. 
There is no royal road to its creation—honest labor is 
the only talisman that can lead to enduring capital and 
wealth. If the country could make the people rich by 
the aid of a printing press, then it ought to be done, a nd 
done speedily, for it would be a cruel government that 
would refuse,on such terms to enrich its people. The 
foolish experiment has been many times tried in the 
history of nations, but always with certlfn failure, 
disaster and ruin. Thomas Jefferson uttered the judg¬ 
ment of experience, Reason, aud science when he skid: 
“The truth is that capital may be produced by industry 
,aml accumulated by economy; brut jugglers only will 
propose to create it by legerdemain tricks with paper.” 

WHO IS BENEFITED BY INFLATION. 

If the currency were at once greatly inflated, who 
would get it? Would they who most need it? Cer¬ 
tainly not,unless they have something to sell that 
somebody wants to buy who has received sfime of the 
money. To the mass of mankind this wpuld* seldom 
happen. Yet all men to Some extent must*continue to 
buy, and all such, under inflation, would be compelled 
to pay more for what they want, without any equiva¬ 
lent compensation. But, you may ask, is nobody ben¬ 
efited by inflation. And I answer, from the profound- 
est conviction, that nobody gains any honest advantage 
by inflation. Yet some do gain by it, many would be 
made rich, some no doubt millionaires, but generally 
at the expense of other people and of justice. The 
class most enriched by great inflation would be the 
dealers in all kinds of speculative bonds, dishonest or 
worthless stocks, and trashy securities, the most un- 
meritorious class of men in our country, and the very 
men who are most clamorous for inflation, the reck¬ 
less speculators and gamblers of Wall Street. The 
class next most benefited would be the great manu¬ 
facturers of the country, who have large accumulations 
of their products on hand and for sale, because they 
would at once add to their prices in proportion to the 
inflation of the currency, and thereby they might be 
enriched, but at the expense of the consumers of their 
products. The third class to be benefited, hut hi less 
degree, are the owners and dealers in speculative real 
estate located in, or in the vicinity of the growing cit¬ 
ies of the country, who, by the aid of inflated cur¬ 
rency, would be able to keep up and advance their 
prices, but to the injury of the people who desire to 
obtain and hold such property for permanent enjoy¬ 
ment. The great classes last and least benefited by 
currency inflation are the farmers, the chief owners of 
the land, the producers of the great agricultural sta¬ 
ples of tlie country, and the vast numbers who live by 
the wages of daily labor. It has been the unvarying 
experience of our country, and of every other com¬ 
mercial nation, that the values of agricultural staples 
and the wages of labor are always less enhanced, less 
beneficially affected, and more tardily effected at all, 
by any inflation of the currency, or by any inflation 
in prices caused by high or protective tariffs than any 
other values. All other values are always much more 
enhanced than these by such influences, and therefore 
always to the injury of these great classes. Their in¬ 
terests are never so safe, or so well protected, as un¬ 
der a currency equal to and convertible into gold and 
silver, which is the only currency that robs nobody. 


The New Currency Law-How it AVorks. 

[From the Boston Advertiser.] 

It appears from a statement furnished the New York 
Bulletin , by the comptroller of the currency, that twenty- 
five national banks have deposited legal tenders and 
taken up bonds to secure circulation under the new 
law. Only one of these seems to have done so in con¬ 
sequence of the requirement of the old law that bonds 
shall be deposited to the amount of one-third of the 


capital. The others have done 
their circulation. The deposits 
the amounts of bonds taken up 

New York banks. 

Missouri 4< . 

so in order to reduce 
came from nine States, 
being as follows : 

Illinois <c . 



Indiana (i ... 



Michigan (< . 


. 140,000 

Ohio “ . 


. 100,000 

Louisiana “ . . 





. 50^000 

So. Carolina “ . 



Total. 




The amount of legal tenders received, which meas¬ 
ures the amount of new national bank circulation that 























THE FINANCIAL RECORD. 


87 


can be distributed, is $3,880,050. The applications on 
file exceed this sum by about $800,000. As the unused 
surplus of the authorized issues far exceeds this sum, 
there is no present prospect of a call upon the New 
England banks. Indeed, it is not improbable that 
many of the new banks for which application has been 
made will go no further than an application. Only 
three new banks have been organized since the cur¬ 
rency act was passed. One of these was a gold bank 
in California, and the aggregate paid-in capital of the 
other two is but $75,000. If the West and South are 
really hungering for more bank circulation they are 
taking a queer way to show it. 

The machinery for redemption of national bank 
notes has either obstructed the free movement of 
notes to Washington, or that movement is steadily de¬ 
creasing in speed. Up to the 11th instant the offerings 
were $2,862,070. During the next week the amount 
was $2,737,390. Last week the receipts were scarcely 
more than $1,800,000, a decline of thirty-three per cent, 
from those of the week before. It is to be regretted 
that any obstacles should be in the way of a fair trial 
of the system at its very beginning. The scheme 
ought to be perfected by this time, so- that persons or 
banks sending on notes for redemption may receive 
legal tenders in return as soon as it is possible to veri¬ 
fy the amounts. 

The provision releasing the banks from the require¬ 
ment of keeping any reserve against circulation, but 
requiring instead a deposit at Washington of 5 per cent, 
of the amount of their circulation has been generally 
supposed to set a considerable amount of money free 
which had before been tied up in reserve. And per¬ 
haps it does so in a great many instances; but it ap¬ 
pears that in some cases the amount of deposit required 
for the redemption of circulation is much greater than 
the whole amount of reserve the banks are required to 
keep under the new law. Among.some of the country 
banks the question has arisen as to whether the new 
law required a bank to keep two-fifths of its reserve 
against deposits in its own vaults, if the five per cent, 
deposited in Washington on account of the redemption 
of its circulation is equal to or exceeds the whole 
amount of reserve required by law. This question 
presenting itself to.the First National Bank of South 
Weymouth, the cashier laid the matter before the 
comptroller of the currency, who decided July 24 that 
“if the deposit of five per cent, of your bank’s circu¬ 
lation witli the Treasurer of the United States should 
equal or exceed 15 per cent, of the amount of its lia¬ 
bility on account of deposits it would not be required, 
under the law, to keep any additional reserve.” 

This decision of the Treasurer is, of course, in ac¬ 
cordance with the law, but it is evident that many 
banks of small deposits and comparatively large circu¬ 
lation are by the terms of this law relieved from the 
requirement of keeping any reserve at all against de¬ 
posits. In fact we think that most of the country 
banks of the New England States,—and probably the 
same is true of other large sections,—will find that the 
5 per cent, of their circulation which is to be deposited 
in greenbacks in Washington will cover all their legal 
liability as to deposit. Several banks in this State 
will find that 5 per cent, of their circulation is more 
than sufficient to cover all their rescu e requirement, 
and in one at least is more than four times larger than 
is required by their deposits. But while the law re¬ 
lieves them their own personal safety will not do so, 
and we doubt if they will be inclined to regard them¬ 
selves as in a comfortable or even safe condition unless 
their reserve, immediately available, is about up to the 
old requirement. 

[From the N. Y. Bulletin.] 

The Banking and Currency act of June 20,1874, has 
been in practical operation for about four weeks, and 
we may now fairly compare its results with the antic¬ 
ipations to which utterance was given a month ago. 
We were told that the withdrawal of bonds deposited 
against circulation and the depositing of 5 per cent, in 
the Treasury against bank note issues would cause a 
severe drain of legal tenders upon the banks of the 
Atlantic cities. The following comparison of the 
amount of legal tenders in the banks of New York, 
Boston and Philadelphia, on the 18th inst., and four 
weeks previous, will show how far this prediction has 
been fulfilled: 

July 18. June 20. 

Banks of New York.$61,850,000 $61,838,000 

“ Boston. 9,670,000 10,015,000 

“ Philadelphia. 15,500,000 15,526,000 

Total.$87,020,000 $87,379,000 

Decrease. 359,000 . 

Thus it appears that the banks of the three cities 
combined have lost only $359,000 of legal tenders, 
during the month in which the transfer of reserves, 
the redemption of notes, and the calling in of bonds 
has been going on; confirming the expectation we ex¬ 
pressed in advance, and for which we were sharply 
criticized in certain quarters. 

Including the deposits against circulation and those 
made for the withdrawal of bonds held against circu¬ 
lating notes, the Treasury has received $19,533,319 of 
legal tenders from the banks under the operation of 
this new law. The principal portion of this has come 


from the country banks; and, judging from the con¬ 
dition of the legal tenders in the banks at the princi¬ 
pal financial centers, as above indicated, the country 
institutions have contributed this large amount chiefly 
from their own vaults and without drawing upon their 
agents at New York and elsewhere—a course of affairs 
which, our readers may remember, we have repeatedly 
indicated as likely to be realized, from the fact that 
this class of banks held a large surplus of legal tenders 
beyond their reserve requirements. 

Spirit of the Press. 

[Independence (Kan.) Democrat.] 

Loud complaints are made by the western people 
touching their sufferings, while it is assumed that the 
East is prosperous and happy. Never was there a more 
silly blunder. It is estimated that 600,000 people are 
without employment in the two States of New York 
and Pennsylvania. Thousands, heretofore employed, 
are now on the poor list, and everywhere mills and 
factories, once busy, are shut. The panic hurt the 
East worse than it did the West, and the paper money 
and financial policy of the party in power lias borne 
more heavily on the former than on the latter. 

Now that inflation lias triumphed, and the Western Re- 
publicans have obtained all they asked and more than 
they expected to get, we ought to begin to feel the ef¬ 
fect of abundant present and prospective supply of ir¬ 
redeemable greenbacks and national currency. The 
first effect that we have discovered since inflation has 
been an accomplished fact is, the fall in the price of 
wheat, from $1.25 per bushel to an average of about 75 
cents per bushel. Either the fall in the price of wheat is 
occasioned by the assurance of abundant irredeemable 
currency, or the advocates of inflation to benefit West¬ 
ern farmers must abandon their sophistry. 

[From the Chicago Times.] 

If the Indiana convention was a “democratic party” 
convention, and if the platform it adopted be a “demo¬ 
cratic party” platform, does The World say it is a le¬ 
gitimate inference from that platform that the demo¬ 
cratic party creed is “Free Trade and Hard Money?” 
Or will The World admit that a legitimate inference 
therefrom would be that the democratic party creed is 
Sham Money, Governmental Interference with Com¬ 
merce and Industry, and Repudiation of the Public 
Debt? Does The World , being the organ-in-chief and 
the duly constituted political pope of the “democratic 
party,” support and champion the “democratic party,” 
which met and formulated its political creed on the 
15th instant in Indiana? Or does The World , being the 
authorized and infallible vicegerent of the “demo¬ 
cratic party,” pronounce the pretended democratic 
party in Indiana to be a fraud and a sham? 

[Cincinnati Enquirer.] 

The Democracy of the West and South do not pro¬ 
pose to walk with their eyes open into any trap that 
may be prepared for them. Sooner than that they 
will not meet with the New York and New England 
men in Convention at all. There are thousands and 
tens of thousands of good men west of the Alleghanies 
who believe it would be better, under any circumstan¬ 
ces, to have nothing to do with them and to exclude 
them from the Convention. As a general "thing, the 
Democracy of New England are entirely unable to 
carry any State at a Presidential election. They may 
mark out a policy for others, but they can’t carry it 
themselves. Their advice and its authors are not, 
therefore, potential. As for New York, she is some¬ 
times against us and sometimes for us. Her Demo¬ 
cracy is of a peculiar kind. The Hon. Daniel W. 
Voorhees says that during his nine years’ service in 
Congress he never knew her Democratic Representa¬ 
tives to refuse to vote for any measure in the interests 
of capital, and, to all interests and purposes, they 
might as well have been Republicans. We can not af¬ 
ford to be governed by such a State, and, moreover, 
in the future we will not be. 

[New York Express.] 

The Indiana Platform, in its financial plank, is al¬ 
ready opposed by prominent Democrats in the State, 
and the influence of Indianapolis is accused of forcing 
it in, in the interest of the inflationists there. The 
chances are that it has destroyed the inflnence of Gov. 
Hendricks, if not in his State, in the country. Saga¬ 
cious Democrats are already contrasting it with the 
more sound financial plank of the Convention of the 
Democrat in Maine, where the election will take place 
in September. 

[Chicago Tribune.] 

Mr. McCulloch’s views have been public property for 
many years past, yet a restatement of them at this time 
is peculiarly refreshing, and, certainly worth the 
while. Mr. McCulloch has struck out a line that is 
in some respects new. He favors a return to specie 
payments at the earliest day practicable. He does 
not, however, believe that legislation to that end at 
the present time would be expedient. He would have 
the Government “develop the resources of the coun¬ 
try,” repress speculation, and stimulate honest indus¬ 
try. The kind of “development” and “stimulation” 
which Mr. McCulloch would like, is not very clear; 
we do not mean to be ungenerous in suggesting that it 
may comprehend, among other blessings, a heavy 


subsidy to the Northern Pacific Railway. He says 
that the time to resume specie payments was just at 
the close of the war, and followed this up with the 
statement already noticed, that resumption at present 
is inexpedient. The coherence of this argument is not 
apparent. 

[N. Y. World.] 

There are Western politicians who propose going to. 
the country as paper-money men, as inflationists, and 
asking the people to displace the Republican party and 
to put in power an opposition on that issue. The Cin¬ 
cinnati Enquirer is the foremost journal, calling itself 
of the opposition, which advocates this policy. We can 
more easily believe that Governor Hendricks and Gov¬ 
ernor William Allen, Senator Thurman and Mr. Mi¬ 
chael C. Kerr have supposed the cheap-money craze 
would wear itself out, than that they would hesitate 
to encounter a temporary unpopularity in setting 
forth its true character in the light of Democratic 
principles and the established truths of a sound polit¬ 
ical economy. 

[Cincinnati Enquirer.] 

At the last Indiana Democratic State Convention 
the Wall street influence was on hand. It had its 
platform already drafted. It had its men picked out 
to put it through. Mr. Kerr was there with thousands 
of copies of a Wall street document ready for circula¬ 
tion among the delegates. But all this was not suffi¬ 
cient. The honest Democracy of our sister State re¬ 
pudiated it with disgust and scorn. Thus the people 
have won the first great fight of the campaign. 

[New York Tribune.] 

The inflationists, everywhere outside of New Eng¬ 
land, New York, California, and Texas, are actively 
and earnestly pushing things. If they are not met by 
superior activity and earnestness on the other side, 
their final triumph and the disgrace of the country are 
but questions of time. It is therefore of the highest 
importance to those who comprehend what great things 
are at stake that they should know the true situation 
of affairs. 

[From the Rockford (Ill.) Register.] 

Gov. Hendricks made a carefully prepared and 
elaborate speech. But it was the speech of a politi¬ 
cian—not a statesman. If we were in Indiana, we 
should urge the Republican State Committee to have 
a few thousand copies of it printed, as a campaign 
document. It could not fail to do good service. 


Inflationist’s Column. 

[From the Philadelphia Press.] 

Secretary Bristow has failed in his first financial ex¬ 
periment, and his mistake was in trying an experiment 
through brokers and middlemen, when he might have 
rested securely on the people. 

When the last Napoleon, in the early part of his ca¬ 
reer as ruler of France, wanted money, he threw him¬ 
self directly on the people, and issued notes bearing, 
we believe, three per cent, interest, gold, and put 
them as low in denomination as ten francs. These 
two-dollar bonds were taken with avidity by the com¬ 
mon people. Not a boy in any workshop but took 
his one or two. Not a peasant farmer but laid away 
his little treasure in the exchequer of the Empire. 
The result was that all the money the Government 
wanted it had at once and at cheap rates. 

It seems strange that it is so hard to teach the rulers 
in a Republic the lesson that they must fall back on 
the people in every great movement, financial as well 
as military or political. It seems strange that what 
the Emperor Napoleon saw so clearly, Republican lea¬ 
ders in a Republic cannot be made to understand. 

To-day, the common people of the United States 
have in saving banks and savings-fund companies, 
about which they do not feel quite secure or easy, the 
very millions that the Government wants. They have 
it there, too, at low rates of interest. Should the Gov¬ 
ernment issue a three-sixty-five per cent, loan—that is, 
one cent per day on every hundred dollars— and place 
the bonds as low say, as ten dollars, and offer them di¬ 
rectly to the people, without conditions or subscrip¬ 
tion or embarrassing red-tape of any kind, they would 
be absorbed in a day as the dry earth sucks up a re¬ 
freshing summer shower. 

The advantages to the Government of such a loan 
would be: 

First. The saving of all commissions and brokers’ 
costs. 

Second. The obtaining of the money at 3.65 per 
cent, currency interest, instead of five and six per cent, 
gold. 

Third. Having for creditors its friends at home in¬ 
stead of its possible enemies abroad- 

Here is Mr. Bristow’s opportunity. Let him burn 
up his “put and call” bids, and brushing away syndi¬ 
cates, bankers, brokers, and expensive middlemen of 
every kind, appeal directly and honestly to the peo¬ 
ple. Let him do this, and he will be the first Lord of 
the Treasury we have had since the country began to 
grapple with its great war debt; and once successful, 
and having overthrown the stronghold of the most bur¬ 
densome class of middlemen, he will be at the head of 
a Granger movement that means something. 















































































• 






































































































































































FINANCIAL RECORD. 

“WE NEED ONE THING BESIDES MORE MONEY, AND THAT IS BETTER MONEY .”—Senator Zach. Chandler. 


VOL. J. 


FRIDAY, AUGUST 7, 1874. 


NO. 27 . 


The Financial Record will be continued until further uo- 
tlce, and will he sent free of postage, to all persons who will re¬ 
mit 50 cents to the publishers. All editors who receive it are 
invited to send their papers in exchange. It will no longer be 
published by the American Social Science Association, 
but for the present, as heretofore, communications respecting 
it may be addressed to the Secretary of the Association, Ft 15. 
Sanborn, No. 5 Pemberton Square, (Room 21,) Boston; and all 
exchange papers, public documents, etc., may be forwarded to 
the same address. 


Financial Events and Possibilities. 

The bank currency offered for redemption at the 
Treasury last week amounted to §3,140,000, being by 
several hundred thousand dollars the largest amount 
in any week since the redemption system went into 
effect. The total offerings during the month of July 
were S10,518,005. When it is remembered that the 
system did not go into operation at the beginning of 
the month, and that the period covers the whole time 
of uncertainty and delay, the scheme must be ad¬ 
mitted to have met with unexpected success. Of 
course there is much to be allowed for in the fact that 
there is an unexampled plethora of idle money, and 
it is extremely probable that the coming month will 
see a very considerable reduction in the amount offered. 
Nevertheless it is much to have had sent home for 
redemption §10,500,000 of national bank notes, 
since only a small part of them can be got into circu¬ 
lation again until a real demand for their use springs 
up. So far at least we have actual contraction. 


In this connection we cannot forbear to dissent from 
some of the conclusions of the Nation, in its issue of 
July 30, as to the working of the new currency law. 
The principal part of the article to which we refer is 
reproduced in this sheet. The Nation is theoretically 
correct. The new law does legalize an inflation already 
made, and sanctions bank expansion. But it turns out 
that the banks are wiser than Congress. In spite of 
the relaxation of the reserve requirements, the banks 
continue quite as strong as they were before the law 
was passed. The banks of New Y r ork on the 1st 
August held four million dollars more in legal tenders 
than they held on the 20th June; and they were nearly 
six millions, of dollars stronger in their reserve as 
reckoned on the old basis than they were on the 20th 
June. The position of the Boston and Philadelphia 
banks was very slightly changed, but so far as there 
was any variation it has been for the better. Hence 
we are forced to believe that, as the law must be 
judged by its effects, both the Nation on the one hand 
and Mr. Morton on the other, are wrong in call¬ 
ing it in this respect a measure of expansion. On a 
minor point the Nation seems to have assumed that 
the Treasurer will neglect a plainly imposed duty, and 
then to have taken the results of that neglect as in¬ 
evitable. It says that although bank notes are to be 
redeemed on presentation, the Treasurer “is not obliged 
to notify the issuing institutions before the first day of 
the next month.” 

The law says he shall notify them severally on the 
first day of each month, “or oftener, at his discretion.” 
With a lively movement towards redemption this dis¬ 
cretion must be often exercised. And finally, though 
the Nation holds that the profit of circulation has 
been largely increased, the fact remains that many 
banks have withdrawn a part or all their circulation, 
and curiously enough, if the theory of the Nation is 
true, the banks in the very cities where it holds that 
the profit has been most largely increased. For our 
own part, while we know that the inflationists intend¬ 
ed the new law as an expansion act, we do not credit 
them with great shrewdness. We have experience of 
the density of their ignorance of financial matters, 
and we cannot be sorry to be able to think that their 
blundering stupidity was the cause of an act which 
really works in opposition to the theory that was al¬ 
most universally assented to. 

The usual statement of the expenditure of the gov- I 


emment for the fiscal year ended the 30th of June has 

been published. We compare the return, item by 

item, with that for the preceding year: 

1873. 1874. Decrease. 

Civil and miscellaneous. $ 73,328,110 5 69,641,593 § 3,686,507 


War .. 46,323,138 42,313,927 4,009,211 

Navy. 23,526,257 30,932.587 *7,406,330 

Indians. 7,951,705 6,692,469 1,259,236 

Pensions. 29,.459,427 29,038,415 321,012 

Interest on debt. 104,750,688 107,119,815 *3,369,127 

Premiums. 5,105,920 1,395,074 3,710,846 


Total §290,345,245 §287,133,873 t§ 3,211,372 


* Increase. fJV T et decrease. 

From this it will be seen that there has been some 
economy as compared with the year 1873. It would 
have been much more satisfactory if we could have 
been informed in what classes of expenditures under 
the head of “civil and miscellaneous” the saving has 
been made. The very large increase of expenditure 
for the navy was due to the Virginius affair. The in¬ 
terest charge shows an increase for the first time since 
1867. The decrease in premiums on the public debt 
purchased is only a reminder that the debt has not 
been materially diminished during the year. As this 
one item is larger than the whole retrenchment during 
the year it follows that there has really been no re¬ 
trenchment at all. As compared with 1872 civil and 
miscellaneous expenditures the past year have been 
larger by nine millions, was larger by seven millions, 
navy larger by nine and three-quarters millions, and 
Indians and pensions are practically the same, the va¬ 
riation on the two combined being but §130,000. Ac¬ 
cordingly the ordinary expenses this year have been 
almost twenty-six million dollars larger this year than 
in 1872, showing a very considerable margin for im¬ 
provement. 


The ordinary expenditures of the government for 
July, 1874, amounted to §16,516,378, which, it will be 
noticed, is at a rate exceeding that in either of the two 
years past; but this is not a safe basis for circulation. 
The fiscal year begins with July, and the new appro¬ 
priations then become available. This explains the 
large expenditures of the past month. The statement 
is one which we have not heretofore had from the 
Treasury Department, but it is a very necessary return, 
and one which we trust will be continued and supple¬ 
mented by a similar monthly statement, showing the 
receipts of government. We have only the report of 
internal revenue receipts, a§ yet; that item showed an 
increase of §594,149 this year over last, the receipts 
having been §9,415,064 in the month of July, 1874, 
against§88,820,915 in the corresponding month of 1873. 


Senator Morton on the Currency. 

Senator Morton made a “great speech” at Terre 
Haute, Indiana, on Friday last, in which he spoke at 
length on the currency question. We are unable to 
print a full report this week, nor is it necessary, since 
he said very little that has not been said by him be¬ 
fore. Mr. Morton holds that the panic was not caused 
by any defect in the currency, or in our financial 
system. He contends that the new currency law “ex¬ 
pands” more than the vetoed bill, and that it extin¬ 
guishes contraction. He denies that there would be 
any gain worth the trouble of the change, in substitut¬ 
ing greenbacks for national bank notes, and besides he 
maintains, that the act of 1864 was a “distinct pledge” 
“that the whole volume of greenbacks should never ex¬ 
ceed §400,000,000.” He pronounces distinctly and 
emphatically against the Pendletonian repudiation 
scheme of paying the five-twenties in paper. 

So far we have kept strictly within the terms of the 
official report of the Senator’s speech. There was 
another report, printed by the New York Times, con¬ 
taining a passage far more absurd than anything in the 
official report, and as a curiosity we append this passage. 
Its authorship cannot be questioned; but whether it was 
first written and afterwards repented of, or was inter¬ 
polated for home consumption after the speech had 
been mailed to the newspapers is worth knowing. 

“Notwithstanding the immense clamor against ex¬ 
pansion and the bitter denunciations from a large 


portion of the press, both houses of Congress, by a 
vote approaching to unanimity, and the President by 
his approval of the bill, recognized the necessity for 
increasing the amount of money in circulation in order 
to restore confidence, and to again set the wheels of 
business in motion. The bill extinguishes the jhreat 
of retraction which hung over the business of the 
country like a suspended sword, and is an explicit de¬ 
claration against that policy. The common sense of 
the country prevailed against theory, and the good 
effects of the measure are already visible in every part 
of the United States. The monster of contraction, who 
stalked into Congress in December, with insolent air, 
was finally kicked out of it, after having had expansion 
crammed down its throat. Contraction, which was but 
another name for confiscation, became so odious, that 
in the closing weeks of the session scarce any one 
dared to lift his voice in its favor. * * * * What 
the country wants is not to be placed upon the rock of 
contraction or thrust into the abyss of repudiation, 
but repose, the return of good times, the restoration 
of confidence, the revival of enterprise, progress and 
improvement such as we had for ten years previous to 
the panic. If with this grand restoration and resur¬ 
rection of the country specie payments do not come 
by natural processes, it is certain that they cannot be 
forced by the rack, the thumb-screw, or any schemes 
of slow torture that may be devised. The republican 
platform declares in favor of such an increase of the 
currency as may be demanded by the business of the 
country. Currency is the instrument of business. 
When there is just enough for the business of one 
year it does not demand an argument to prove*that 
there should be more business next year when business 
and population have largely increased. Whatever the 
character of the currency there should be enough to 
do business with; this whether the currency be gold, 
silver or paper. If the quality be not good is that any 
reason why the quantity should be reduced ? If the 
food of a family is not of the best quality is that any 
good reason why the supply should be made less than 
is necessary to their support ? Will the starvation of 
the family contribute to improve the character of their 
food ? It was Dr. Sangrado’s theory that when a 
man’s system was run down and his blood poor he 
should be subjected to still further reduction and blood 
letting. The country has had a surfeit of political 
Sangrados, and the theories of that school of medicine 
for our ills are not winning many supporters at this 
day. 

In striking contrast with the speech of Senator Mor¬ 
ton is that of Mr. Kerr of the same State, our extracts 
from which we complete in this number. Mr. Kerr 
says many things from which we strongly dissent, but 
in the main he preaches good hard money doctrine. 
Now Mr. Kerr is not the leader of the Democrats of 
Indiana as Mr. Morton is of the Republicans. So much 
the more reason why Mr. Morton should lead in the 
right direction, and so much the less why Mr. Kerr 
should combat his own party’s tendencies. But Mr. 
Morton throws himself on the side of wild-cat finance, 
and lets his party lead him; Mr. Kerr stands up for 
honest currency, though his constituents pronounce for 
repudiation. 


Spirit of tlie Press. 

[Chicago Inter-Ocean.] 

The government issued bonds with a promise to pat 
them in twenty years. Payment meant their redemp 
tion in specie, because that was the only lawful money 
We issued greenbacks with the understanding tha 
they also should be paid in specie, but at a time in 
the future dependent on circumstances. It does no 
matter that legally a promise to pay means a promist 
to pay on demand. The greenbacks were receive 
with a knowledge that their redemption was indefinite, 
and this knowledge is the gist of the contract. Declin¬ 
ing to pay them now is no more repudiation than it 
was the day after they were issued. The public re¬ 
ceived these greenbacks with the expectation that 
their redemption would be djlayed to a convenien 
season. 

[Chicago Times.] 

That is a very nice distinction which the Inter-Ocean 
draws between 5-20 bonds and greenbacks. Both are 
payable in gold, it maintains, but the former are paya 
ble in twenty years from the date of their issue, while 
the latter are payable “at a time in the future depen¬ 
dent on circumstances.” They were received by thf 












































90 


THE FINANCIAL RECORD. 


public “with the expectation that their redemption 
would be delayed to a convenient season .” But supposing 
that convenient season should never arrive; in that 
case wouldn’t the notes be repudiated just as much as 
the 5-20’s would if paid on the Pendletonian plan? 

The convenient season seems to be farther off even 
than it was in 1859, when Mr. Morton himself, now 
head-inflationist, opposed a movement to postpone 
the convenient season by the inflation process. For 
more than six months, ending after the middle of 
June, Democrats and Bepublieans in Congress united 
in an attempt to postpone the convenient season indef¬ 
initely, and they were sustained by such journals as the 
Inter-Ocean qf Chicago, and the Enquirer of Cincinnati, 
and would have succeeded but for the interposition of 
a veto. If the Inter-Ocean could have its way, the con¬ 
venient season would never - come while the world 
stands, for it is no more possible to get to redemption 
by expansion than it is to get to heaven by falsehood, 
theft, and hypocrisy. 

[Phil. North American.] 

Our country is fully as rich as England, as the cen¬ 
sus returns show. But we do not make the use of our 
wealth that England does, and the amount of money 
hoarded or otherwise kept inactive exceeds anything 
known in Europe. These habits result from the teach¬ 
ings of that school of finance which, beginning with 
Jackson’s war on the United States Bank, antagonized 
all forms of credit, and so threw inco foreign hands 
enormous opportunities of investing moneys in Amer- 
ca at interest. The work of the Republican party has 
been to demolish this pernicious influence, and to 
build up American finance upon a scale commensurate 
with the aspirations and capacity of the Republic. 
This ambition is stigmatized as inflation and expan¬ 
sion, while narrow and contracted views are nursed as 
synonymous with prudence and safety. 


The New Currency Baw. 

[From the New York Nation.] 

Congress has passed a bill which suits, and which 
ought to satisfy both the inflationists and their oppo¬ 
nents. For the former discover in the measure an ex¬ 
pansion of more than fifty million dollars; while the 
latter, according to an estimate printed in the New 
York Tribune , are to be comforted by an indirect con¬ 
traction at least twice as great. 

Study of the act only strengthens our first impres¬ 
sion that the final efforts of the inflationists were 
planned with ingenuity and rewarded by success. 
Whenever a section of the bill showed a tendency to 
produce contraction, it was balanced in another sec¬ 
tion by some provision of an opposite drift. Thus 
Section 4, which facilitates the withdrawal of national 
bank notes, is offset by Section 2, which increases the 
profit upon circulation to the extent of nearly one-half 
per cent, per annum in the case of country banks, of 
seven-eighths per cent, in the cities of redemption, and 
of as much as one and three-quarters per cent, in New 
York. The gain is greatest where it was most needed 
—with the banks which placed the least value upon 
their circulation as it stood. 

The direct inflation caused by the act is of course 
$26,000,000. This sum has been made a permanent 
addition to our legal tender money. Nor does it affect 
the force of the expansion that the notes were already 
outstanding. But for the 6th Section of this act the 
condition of the Treasury would have warranted, and 
even compelled, the gradual withdrawal of every dol¬ 
lar of over issued greenbacks during the current fiscal 
year. The process would have caused little disturb¬ 
ance and less suffering. For the issue, until Congress 
endorsed it, was barely more than nominal. The notes 
emitted by authority of Mr. Richardson remained even 
to the end, distrusted and unused. Some of them have 
been regained by the Government, and added to its 
currency reserve. The rest have gone back to the 
Treasury, where they are locked up in trust for the 
banks. The return made to the Comptroller of the 
Currency, on May 1, exhibited an increase of $21,525,- 
000 in the legal tender notes represented by U. S. cer¬ 
tificates compared with the amount deposited at the 
corresponding date in 1873. The change which the 
act produced in the status of the “illegal tenders” will 
be realized by a moment’s consideration; now 382 mil¬ 
lions stand where 356 millions stood. The field of our 
next battle lies beyond them. 

The indirect inflation caused by the abolition in Sec¬ 
tion 2 of every vestige of reserve upon circulation, is 
greater than the direct increase of currency estab¬ 
lished by Section 6, and is just as positive an expansion 
as the issue of s5 many additional notes. Its extent, 
calculated according to the latest report, and on the 
supposition of the withdrawal by the banks from their 
redeeming agents of an amount equal to the entire re¬ 
leased reserve, will be as much as $36,170,242 distrib¬ 
uted among the different classes as follows: 


Gain of country lianks. $35,456,350 

Net gain in cities of redemption. 3,020,831 

$38,478,181 

Less net withdrawal from New York banks. 2,307,939 
Total expansion. $36,170,242 


This, remember, is the minimum enlargement—the 
smallest increase contemplated by the authors of Sec¬ 
tion 2. But we can safely predict that the redeeming 
agents will not be called upon for the whole of the re¬ 
leased reserve, or anything like it. So unprofitable a 
demand is scarcely imaginable, even as a possibility. 
If the distribution continues according to the present 
proportion, the indirect inflation will rise to §55,051,- 


565, apportioned thus: 

Gain of country banks...$35,457,350 

Net gain in cities of redemption. 14,232,479 

Not gain of Now York banks.••. 5,361,736 


Total expansion.$55,051,565 


It has been said that the banks, remembering their 
experience last September, will decline to avail them¬ 
selves of the permission so unwisely given to weaken 
their reserve. On what ground do men venture who 
expect self-denial from the banks ? What was the les¬ 
son which the panic taught ? Was it not that the 
strong banks will support the weaker ones at the ex¬ 
pense of their depositors and the risk of their credit; 
that when the pinch comes, the rash and the prudent 
occupy the same footing with “pooled” resources and 
a common fate ? 

While the expansion induced by this section is thus 
large and indisputable, the contraction of the currency 
which has been claimed as the indirect outcome of 
other provisions of the act cannot be considerable, and 
may prove imaginary. The estimate already men¬ 
tioned, which was published as having come from 
Washington, rates the amount of this contraction at 
§117,000,000. If the computation had not been widely 
eopied, it would be unworthy of serious criticism. 
The very first item of the estimate credits the 5 per 
cent, deposited against circulation with producing a 
contraction of §17,000,000, because, to use its own 
words, “that amount of legal-tenders will be irrevo¬ 
cably withdrawn, so long as the national banks keep 
their notes out.” Now, whether these greenbacks are 
held by the Treasury or locked up in the vaults of the 
banks, cannot possibly make the slightest difference to 
anybody. In either position, they form the bottom of 
the reserve. We may note here, but rather as a curi¬ 
osity than as a matter of importance, that the provi¬ 
sions for redeeming the" circulation do really involve a 
slight expansion, instead of the contraction erroneous¬ 
ly claimed for them. The Treasurer of the United 
States is required to redeem bank-notes on presenta¬ 
tion. But he is not obliged to notify the issuing in¬ 
stitutions before the first day of each month. Thus, 
to some extent, greenbacks will be released for a sea¬ 
son, and national bills will take their place in the re¬ 
serve to secure deposits. 

The estimate assigns a further contraction of §20,- 
000,000 to represent “additional balances which will be 
retired by the country banks.” Yet should these in¬ 
stitutions draw upon the cities of redemption for the 
5 per cent, which must be kept in Washington, and 
should the cities of redemption in their turn take their 
entire provision for circulation out of New York, the 
act will still leave all the classes far better off than it 
found them—that is, with much more money to em¬ 
ploy. The country banks will gain a little more than 
thirty-five millions, the cities of redemption a little 
less than ten millions, and the New York banks very 
nearly four millions. Among them all, the total in¬ 
crease of usable money will amount to quite $49,000,- 
000. Even in the extreme supposition that New York 
will be called upon to supply the cities of redemption 
with greenbacks, not only for their deposits in the 
Treasury, but to replace the legal-tenders required 
from them by country banks, its available funds will 
not be noticeably diminished, although the expansion 
in the cities of redemption will be materially increased. 
A calculation made upon this basis shows that the 
country banks will gain, as before, something over 
thirty-five millions; and the cities of redemption al¬ 
most exactly nineteen millions. The decrease in New 
York, on the other hand, will be barely three millions; 
and the net increase of usable money among all the 
classes, will rise to $51,000,000. 

The estimate proceeds by putting down $10,000,000 
for “currency in transit to and from redemption cen¬ 
ters.” It might have guessed $100,000,000 with as 
much reason, because the total amount of bills of 
other national banks held by all the banks in the 
United States, at the date of the last published return, 
was only §20,636,358. A further contraction of $20, 
000,000 is credited to the Treasury as an increase of its 
working balance, “necessarily made heavier because 
the reserve to be drawn upon in emergencies is abol¬ 
ished.” We might reply that the reserve never existed 
outside the fancy of a foolish Secretary; for the last 
clause of the 6th Section of this act exposes the ab¬ 
surdity of the pretence that “retired and cancelled” 
greenbacks were intended to be a permanent resource. 
We object, however, for a better reason. The “re¬ 
serve” was never needed by legitimate fiscal demands. 
It was employed on one occasion to a small extent for 
political effect, and at another time more freely to re¬ 
lieve the money market, or rather to replace funds 
which had been used with that intention. But, as a 
provision exacted by the necessities of the Govern¬ 


ment, not a dollar of it did service—ever. The curren¬ 
cy now in the Treasury exceeds the sum held at the cor¬ 
responding dates in 1871, 1872, and 1873, as well as the 
average amount on hand for either one, two, or three 
years back. Beyond dispute, the Secretary has the 
power to increase his balance^ materially. But such 
a course is unnecessary, would be very unpopular and 
is contrary to the whole spirit of the act. 

To the items of contraction we have noticed the es¬ 
timate adds $50,000,000 for “national-bank circulation 
likely to be retired in excess of the legalized new is¬ 
sue.” This is explained by the statement that the 
profit has been so reduced through charges of redemp¬ 
tion-as to create “a strong tendency among the banks 
to abandon their circulation, while they can avail them¬ 
selves of the present high prices for Government 
bonds.” We have already shown how the abolition of 
the reserve offsets the cost of redemption, and leaves 
circulation at least as profitable as before; as to the 
second point, the current quotations for United States 
securities are not higher than usual. The banks which 
retire circulation will only increase the income of in¬ 
stitutions which retain it. The net withdrawal in ex¬ 
cess of the additional notes taken up by new banks 
ought not to be large, even on the unnatural money 
market now existing. There is, however, fair ground 
about this point for an honest difference of opinion. 
We think that the contraction caused by this with¬ 
drawal will be inconsiderable and of brief duration. 


A Boston View of our Finances. 

[“G. B.,” in the New York Nation.] 

Ever since the war closed, the great effort of the 
Treasury and the people has been to depress the price 
of gold. Not only has the former sold all its receipts 
from customs, but it has actually diminished its re¬ 
sources, holding a surplus above liabilities of only ten 
millions (against thirty-five millions in 1869), with a 
total of $74,000,000 (against $110,000,000 at the ear¬ 
lier date). Add to this the enormous force of the Gold 
Clearing-House, through which transactions of §100,- 
000,000 in a single day are often settled with three or four 
millions of actual gold, thus multiplying the apparent 
supply to the full extent of the larger amount. This 
artificial depression would long since have been cor¬ 
rected by foreign export, had it not met a counter-cur¬ 
rent in the apparently inexhaustable demand for our 
securities abroad. 

Now let us suppose that while these combined forces 
have kept gold at 110 to 120, the real depreciation of 
our currency, as measured by general prices, is 150; 
in other words, that the price of gold, as frequently 
happens with coffee, wool, sugar, or any other article, 
is below - the average level. Is it not evident that much 
more may be had for the same money by turning it 
into gold and spending it in Europe, than by spending 
it in currency here ? It is, of course, a matter of guess¬ 
work, but, after talking with many persons, I am in¬ 
clined to place the average of Americans in Europe at 
not less than 50,000, and allowing them an amount of 
$2000 apiece, which is certainly not excessive, we 
should have $100,000,000 as the yearly drain upon us 
from this cause. 

Looking at the subject from another point of view, 
we find it admitted that, since the w - ar closed, the 
United States have run up a debt in Europe to an 
amount of 1500 millions. But except during the panic 
last fall we have not only imported no gold, but we 
have shipped from thirty to sixty millions a 3 - ear. And 
that this is not wholly the surplus produce of our 
mines is shown by the steady diminution of the only 
visible and it is to be feared the only real stock of gold 
in the country, that in the Treasury. 

While the President w - as imbibing the views of 
Senator Jones, it is a pity he did not include that por¬ 
tion which involves an accumulation of gold and a 
stoppage of sales by the Treasury. The bank of 
France, with five hundred millions of notes, holds 
$250,900,000 of gold, and yet they hesitate to resume, 
and keep their rate of interest higher than any other 
large market in Europe. We have $730,000,000 of 
notes afloat, besides six hundred millions of bank- 
deposit currency, while the Treasury holds but seven¬ 
ty-five millions of gold. 

Of course the price of gold w - ould advance, but, as 
Senator Jones says, that would not be an unmixed 
evil. In the first place, Americans would come home 
and spend their income here. Next, the agricultural 
interest would at once revive, and put an end to the 
dangerous conflict between the farmers and the rail¬ 
roads. Thirdly, our manufactures, which, while they 
have to bear the odium of an excessive tariff, get no 
benefit from it, and are languishing under foreign com¬ 
petition, w ould also revive. Last, but by no" means 
least, it would furnish the only effective answ - er to the 
inflationists. The strongest argument of Senator Mor¬ 
ton and his coadjutors in favor of more currency rests 
on the decline of gold last fall to 106 P2. With gold 
at 140, the country w - ould wake up to the true state of 
the case, and Congress would be compelled to deal 
with the real difficulty, the condition of the currency, 
the evil effects of which are now artificially concealed. 
























THE FINANCIAL RECORD. 


91 


Au Indiana Democrat’s Plea for Honest 
Money. 

[From the speech of Hon. M. C. Kerr at Seymour, (Inch,) July 

1, 1874J 

The most vitally important subject of practical 
statesmanship now demanding solution in our country 
is the currency. It is not a question of the payment of 
bonds; it is not a sectional question; it is not a ques¬ 
tion that should arouse passion; it can never be set¬ 
tled wisely except under the guidance of cool reason, 
without unfraternal bitterness, and upon the principles 
indicated by the universal experience of commercial 
nations. The vast importance of its right settlement 
no man can estimate, for the currency of a country di¬ 
rectly and most materially affects almost every interest 
of the nation and the people, every effort of labor, every 
reward of toil, the success of every enterprise, and the 
maintenance of both private and public morals. In all 
respects, the great subject was always fully understood 
and appreciated by all the fathers and founders of our 
institutions, and by almost all our rulers prior to 1861. 
This is most impressively and honorably true of that 
great party in whose name we are assembled here to¬ 
day, because, during its long, wise, prosperous, and glo¬ 
rious government of our country, it never for a year or 
a day, in peace or war, in prosperity or adversity, suf¬ 
fered the currency to be torn from its only safe and 
sure anchorage in the principles of the Constitution, 
the accepted currency of the world’s commerce, the sol¬ 
id enduring basis of gold and silver. There never was, 
and never can be, a good national currency that does 
not rest upon the sure foundation of intrinsic value, of 
money whose value is fixed by the labor it costs to 
produce it; of money created under the injunetion“that 
in the sweat of thy face shalt eat thy bread.” Full of 
the convictions, wise in the then past experience of the 
world, and faithful to duty, our forefathers imbedded 
these principles in our constitution, and cherished 
the fond hope that they had thereby forever secured 
their posterity against the evils of an irredeemable 
paper currency. They declared in the constitution 
that “no State shall make anything but gold and silver 
coin a tender in payment of debts.” That is our eon- 
situtional basis, and it precisely coincides with the con¬ 
clusions of universal experience, and of science, and of 
sound morality and natural law. And that wise pro¬ 
hibition, in its true intent, spirit and purpose, applies 
as well to Congress as to the States. And so, prior to 
1861, it was construed by the common judgment of 
the country, by Jefferson, Madison, Jackson, Webster, 
Clay, and all our great statesmen and rulers. So it 
should be construed now, and must be in the future be¬ 
fore our financial safety can be fully re-established. 
So it would be now but for the bad statesmanship and 
great wrong of the Republican party. 

EXPERIENCE OF FOREIGN NATIONS. 

For twelve years our country and people have floun¬ 
dered on under the evils and burdens of an irredeem¬ 
able and depreciated currency. This is discreditable 
to American statesmanship. Great Britain, with a 
population of only 19,000,000, struggling under a na¬ 
tional debt of over §4,500,000,000 restored specie pay¬ 
ment in 1821, in less than six years after the last gun 
was fired on the battle field of Waterloo, which closed 
her eighteen years of bloody war with France and other 
nations ot the Continent. France in less than five 
years after the conclusion of the Franco-Prussian war, 
under national defeat and humiliation, with her insti¬ 
tutions greatly unsettled, suffering from the heavy loss¬ 
es of the bloody and disastrous war, with a dismem¬ 
bered territory, and a population of only 37,000,000, 
staggering under the burdens of a frightful public 
debt of $5,500,000,000, has restored specie payments, 
and made her currency equal to gold and silver. Ger¬ 
many did not suffer any suspension of specie payments 
to take place during her recent war. Wise and hon¬ 
est statesmanship could have restored ours years ago. 

DEPRECIATED CURRENCY. 

The pivot points in our present financial situation 
are the facts that our currency is now depreciated, and 
that the precious metals have ceased to be a circulat¬ 
ing medium, and have chiefly left our country. It is 
unquestionably true that the extent of the actual de¬ 
preciation of our currency is greater than the differ¬ 
ence between it and gold. The purchasing power of 
an inconvertible currency is the true test of its near¬ 
ness to coin. The present nominal depreciation is 12 
percent., but a restoration of specie payments, brought 
about gradually, and without shock, would increase 
the purchasing power of our currency at least 25 to 40 
per cent. This would result from the fact that, under a 
currency equivalent to coin, the cost of production 
reaches its lowest point, the power of banks, corpora¬ 
tions, speculators, stock-jobbers and gamblers, to tam¬ 
per with the currency also reaches its lowest point, the 
standard of value becomes fixed and honest, and the 
tricks of traders and dealers in adding extra profits at 
every turn to protect themselves against the uncertain 
and fluctuating value of the paper currency loose their 
excuse and the result is, and this is the experience of 
our own country and every other nation, that the peo¬ 
ple,the honest industries, and especially the tillers of the 


soil, and those who live by the wages of daily labor, 
and the poor become more prosperous, more content, 
are better rewarded, better paid relatively, they 
can obtain more of the necessaries and comforts of 
life for what they earn, and are infinitely less at the 
mercy of capital, money manipulators, and gamblers 
of every sort. 

HOW THE PRODUCER IS SWINDLED. 

The facts never to be forgotten are that our curren¬ 
cy is now depreciated, and that therefore, of necessity 
prices are inflated, and that, by the added and inevit¬ 
able effects of dishonest and oppressive tariffs, impos¬ 
ed for “protection”—not revenue—prices are still fur¬ 
ther inflated, and by the joint effects of these causes 
coin is driven from the country and from all the com¬ 
mon uses of the people; for it is the experience of 
mankind and the law of money, that when commodi¬ 
ties are high, and the currency is inconvertible, the 
coin is exported to the countries where prices are low; 
the poorer and less valuable cunency always drives 
out the better; and that every addition to an already 
depreciated currency has the inexorable effect of in¬ 
creasing the depreciation of the whole in proportion to 
the addition, and of inflating* prices correspondingly, 
and more money is thereby required to carr} r on the 
same amount of business and it costs more money to 
live, and every man who lives on the interest of his 
money, in order to live as well, must raise his rates of 
interest in proportion to the depreciation of the value 
or purchasing power of money, and this is verified by 
experience for a century past. The inflation of prices 
at home naturally invites cheaper merchandise from 
abroad, increases importations, which must be paid 
for in specie. Thus, while a protective tariff and a 
depreciated currency exclude the products of Ameri¬ 
can manufacture from foreign markets, they encour¬ 
age increased importations of the cheaper manufac¬ 
tures of other nations. Therefore, during the last fis¬ 
cal year there were exported of the products of Amer¬ 
ican handicraft, less than §70,000,000 out of a 
total exportation of over §649,000,000, because the 
inflating . effect of a depreciated currency and of 
a high protective tariff is felt in its fullest pow¬ 
er upon such products. But during the same 
year we imported of the cheaper products of for¬ 
eign handicraft at least §500,000,000, out of a total 
importation of over §684,000,000. That is a sad 
showing for the bounty-fed protectionists of our 
country after twelve years of the most exhorbitant 
protective duties ever enacted by any government in 
the interests of its favored classes. On the other hand 
in that year, there was exported from our country, of 
the unprotected staple products of American agricul¬ 
ture, over §440,000,000. These vast products, more than 
any others of the country, are beyond thereach of 
benefit from inflation, or protection, by depreciated 
currency or high tariffs.. It is a law of commerce that 
the prices of the great staples of a country, both at 
home and abroad, are determined in the foreign 
markets where surplusses are sold. The prices of 
American cotton, tobacco, wheat and other staples are 
all fixed in those markets under the operation of this 
law, and not in our home markets. The currency of 
all these foreign markets is gold and silver. Thus 
some of the greatest interests of our country have 
their values measured by the standard of gold and sil¬ 
ver, while others are measured by the standard of ir¬ 
redeemable and depreciated paper. Thereby the 
farmers are robbed. They sell their great staples on 
the basis of gold and buy on the basis of depre¬ 
ciated paper. They generally sell at wholesale 
prices, and buy at retail prices, so that, even if their 
products, are ever enhanced to any amount, those of 
the protected manufacturer are advanced from two 
to four times as much by the influence of currency 
and tariff inflation. Above all men in our country, 
therefore, the agriculturists are supremely interested 
to have a currency as good as the best, based on coin, 
so that they may buy and sell by the some standard, at 
home and abroad, and that all the citizens shall be 
treated alike. 

I am driven, therefore, by the experience of the past, 
the teachings and examples of the fathers, and the in¬ 
exorable laws of finance, trade and commerce, to be¬ 
lieve that any inflation of an irredeemable currency is 
an honest remedy for nothing, and can only render a 
restoration of true currency more difficult and more 
remote. Inflation only makes cheap money cheaper, 
and prices measured by it higher, and creates a con¬ 
stantly recurring demand for more money. Mr. Web¬ 
ster said many years ago, and what he said is as true 
to-day as it was then, that “Of all the devices invent¬ 
ed by the wit of man to fertilize the rich man’s field 
with the sweat of the poor man’s brow, irredeemable 
paper money is the most effectual.” In 1831, Thom¬ 
as H. Benton, a great statesman and incorruptible 
Democrat, said: “If I were going to establish a work¬ 
ing man’s party, it should be on the basis of hard 
money—a hard money party against a paper party. 
Paper money tends to aggravate the inequalities of 
fortunes, to make the rich richer, and the poor poorer, 
to multiply nabobs and paupers.” 

THE CURRENCY OF COMMERCE. 

It is the fixed and irreversible judgment of mankind 


that the currency of commerce shall be gold and silver. 
It will accept no inferior currency. No great nation 
can do so without incalculable loss at home, constant 
disadvantage in its commercial competition with other 
nations, and the sacrifice of the most valuable oppor¬ 
tunities for prosperous and profitable international 
trade. Our rank as a commercial nation will be infe¬ 
rior, our commerce crippled, our cost of production 
too high, and our domestic values inflated, until we 
can regain for ourselves the currency of commerce. 
You may convert every bond the country owes into 
greenbacks, make the government a generous lender 
to all comers, flood the country with promises as num¬ 
erous as the autumn leaves, and after all, your paper 
currency, like all other values, must submit to be test¬ 
ed by the standard of gold and silver. There is no es¬ 
cape from this law. It pervades the land and the sea 
wherever commerce has a pathway and civilization 
has organized exchanges. It is not in the power of 
government by the inflation of the currency to increase 
values, but only prices are thereby increased. Quarrel 
with these laws if you will, but you cannot change or 
suspend them. 

Capital cannot be made by running a printing press. 
There is no royal road to its creation—honest labor is 
the only talisman that can lead to enduring capital and 
wealth. If the country could make the people rich by 
the aid of a printing press, then it ought to be done, and 
done speedily, for it would be a cruel government that 
would refuse on such terms to enrich its people. The 
foolish experiment has been many times tried in the 
history of nations, but always with certain failure, 
disaster and ruin. Thomas Jefferson uttered the judg¬ 
ment of experience, reason, and science when he said: 
“The truth is that capital may be produced by industry 
and accumulated by economy; but jugglers only will 
propose to create it by legerdemain tricks with paper.” 

WHO IS BENEFITED BY INFLATION ? 

If the currency were at once greatly inflated, who 
would get it? Would they who most need it? Cer¬ 
tainly not, unless they have something to sell that 
somebody wants to buy who has received some of the 
money. To the mass of mankind this would seldom 
happen. Yet all men to some extent must continue to 
buy, and all such, under inflation, would be compelled 
to pay more for what they want, without any equiva¬ 
lent compensation. But, you may ask, is nobody ben¬ 
efited by inflation ? And I answer, from the profound- 
est conviction, that nobody gains an y honest advantage 
by inflation. Yet some do gain by it, many would be 
made rich, some no doubt millionaires, but generally 
at the expense of other people and of justice. The 
class most enriched by great inflation would be the 
dealers in all kinds of speculative bonds, dishonest or 
worthless stocks, and trashy securities, the most un- 
meritorious class of men in our country, and the very 
men who are most clamorous for inflation, the reck¬ 
less speculators and gamblers of Wall Street. The 
class next most benefited would be the great manu¬ 
facturers of the country, who have large accumulations 
of their products on hand and for sale, because they 
would at once add to their prices in proportion to the 
inflation of the currency, and thereby they might be 
enriched, but at the expense of the consumers of their 
products. The third class to be benefited, but in less 
degree, are the owners and dealers in speculative real 
estate located in, or in the vicinity of the growing cit¬ 
ies of the country, who, by the aid of inflated cur¬ 
rency, would be able to keep up and advance their 
prices, but to the injury of the people who desire to 
obtain and hold such property for permanent enjoy¬ 
ment. The great classes last and least benefited by 
currency inflation are the farmers, the chief owners of 
the land, the producers of the great agricultural sta¬ 
ples of the country, and the vast numbers who live by 
the wages of daily labor. It has been the unvarying 
experience of our country, and of every other com¬ 
mercial nation, that the values of agricultural staples 
and the wages of labor are always less enhanced, less 
beneficially affected, and more tardily effected at all, 
by any inflation of the currency, or by any inflation 
in prices caused by high or protective tariffs than any 
other values. All other values are always much more 
enhanced than these by such influences, and therefore 
always to the injury of these great classes. Their in¬ 
terests are never so safe, or so well protected, as un¬ 
der a currency equal to and convertible into gold and 
silver, which is the only currency that robs nobody. 

Cl RIIENCY AND l’OPULATION AND WEALTH. 

It is a delusion that currency should increase in the 
same ratio as population or wealth. The note circula¬ 
tion of all Great Britain for over 50 years last past 
has only varied in amount between §180,000,000 and 
§210,000,000. Yet her population and especially her 
wealth, have been vastly augmented. Our own increase 
in population from 1850 to 1860 was 35 per cent, and 
in wealth 128 per cent, but in total paper and coin cur- 
reney only 36 per cent. And yet that decade was or.e 
of the most prosperous in our history. Our increase 
of population from 1863 to 1870 was 22 3-4 per cent, 
and in wealth only 87 1-2 per cent., but in total paper 
and coin currency (estimating both to have amounted 
in 1870 to §900,000,000), the increase was over 80 per 
cent., and in paper currency alone it was 317 per cent. 

















92 


THE FINANCIAL RECORD. 


This is an increase without precedent in amount, and | 
it is in advance of all decent proportion to the increase | 
in wealth and population, and is only justified by the i 
extraordinary national conditions, in the midst of 
which it was made. It has borne, as such reckless and 
utterly unstatesmanship tampering with the finances 
always will, a hitter harvest of inflation, industrial ex¬ 
pansion, hazardous enterprise and speculation, un¬ 
bounded credit, stock jobbing schemes, vast aggrega¬ 
tions of wealth in speculative corporations, all sorts of 
wicked efforts to make fortunes in a day or by the turn 
of a hand, the formation of selfish and infamous com¬ 
binations to corrupt legislatures, congresses, courts, 
and individuals, and purchase oppressive and hateful 
laws giving legal sanction to monopolies, bounties, and 
robberies of tlie people, and tilling the country with 
immorality, dishonesty, official unfaithfulness and cor¬ 
ruption, and general demoralization beyond all com¬ 
parison with any previous conditions in our country. 

WHAT IS NEEDED. 

W hat our people need is not more money, but most 
emphatically better money; hot more promises , but 
more capital , more things of intrinsic value, more of 
the products of labor, more of savings of economy; 
less of taxation, less of extravagance in expenditures, 
and less excessive exactions of all kinds; less haste to 
grow rich, and more personal frugality; more business 
conducted on the basis of capital, and less on credit. 
It is capital that creates the most legitimate demand 
for currency, because currency is only useful as a me¬ 
dium of exchange, and to facilitate the rapid exchange 
of the commodities produced by active capital. There 
is to-day unquestionably a very unusual want of capi¬ 
tal in our country—not of mere paper money—and 
therefore production is not active or prosperous, con¬ 
sumption is restrained and reduced, and it logically 
results from these conditions that there is now a vast 
amount of idle loanable currency in the country, 
awaiting satisfactory borrowers and investments, more 
than there has been in five years past. And the needed 
and rational remedy is therefore not more paper 
money, but more actual capital and better money. In 
my judgment, the country needs no more credit cur¬ 
rency than it has. It is always to be borne in mind 
that another law of commercial growth and develop¬ 
ment and of currency is, that the more advanced and 
perfect the leading commercial nations become in the 
appliances and machinery for conducting the vast 
operations of commerce, the less currency is needed 
relatively to the amount of business and population. 
Bills, of exchange, notes, checks, certified drafts, and 
clearing house vouchers discharge many of the func¬ 
tions of money, and vastly reduce the quantity other¬ 
wise indispensable. 

FINANCIAL CRISIS. 

Our recent crisis came not as the result of an insuf¬ 
ficient amount of irredeemable paper currency. It is 
one of the evil missions of such money to encourage 
undue expansion in trade, prodigal expenditures in 
society, and to repel the precious and profitable virtue 
of economy from the daily habits of men and women, 
and corporations. It begets fatal extravagance and 
often brings disaster in the very midst of abundance. 
These commercial storms come with faithful regular¬ 
ity, after moderate intervals, to all commercial na¬ 
tions. They come with contemptuous indifference to 
the amount of the currency. The currency in coins 
and bank notes, may be as abundant as the light of the 
sun, and still they come. If there were no currency 
but bank notes, or none but greenbacks, or none 
but gold and silver, or none but copper brass or 
tin, they would still come. It is infinitely wise and 
proper then to inquire why they come. And this inquiry 
stands at the threslihold of intelligent action. The 
history of commerce for a century past is full of light 
on this subject. It triumphantly sustains the conclu¬ 
sions and the testimony of the ablest fiscal writers of 
this or the past age, that these crises are scarcely ever 
caused by the insufficiency of the currency, whether 
of coin or paper. They have their root and origin in 
the individual conduct of men, greatly influenced 
at times, and often most injuriously, by the commer¬ 
cial and financial policy of government. It is less the 
lack of money in the country than it is the gross dis¬ 
proportion between debts and actual values that brings 
personal embarrassment. Men owe more than they 
have values of any kind with which to buy money. 
They owe too much and own too little. Every crisis 
in our country in this century came in the midst of 
the largest abundance of paper money. 

PAST EXPERIENCES. 

In 1817 our currency and all the values of the 
country were confessedly inflated and excessive. Our 
coin bore too low a proportion to our paper money. 
Besides, onr commercial and industrial relations 
were greatly affected and disturbed by preceding 
years of war and commercial restrictions. In 1887 
the entire amount of our currency, paper, gold 
and silver, was greater than ever before, being 
$222,000,000, and averaged $14 per capita. The 
spirit of headlong enterprise in individuals, cor¬ 
porations and States, was without a parallel in our 
previous experience. The exaltation in hopes as well 
as in prices was simply wild and frightful. Hence 
came disaster. In 1857 the aggregate of our paper, 


| gold and silver currencies again surpassed any pre- i 
ceding year, and averaged $10.78 per capita , the total 
volume being $474,300,000. The disasters of that 
year were chiefly the results of grossly excessive credits, 
as are those of the present times. After each of those 
crises there was a considerable reduction or contrac¬ 
tion in the volume of the currency, continuing for 
several years. In a paroxysm of each crisis there was 
a suspension of specie payment. But after each, and 
with varying promptness, there was a return to specie 
payment. To-day our total credit currency is about 
$800,000,000, and our coin only $140,000,000. In this 
age of high commercial development, this is a vast 
volume of currency. But it has one fatal defect ; 
there is too much credit currency and too little coin; 
there is too much depreciated and discounted paper, 
and too little of the currency of commerce. The lat¬ 
ter alone, in spite of the hopes, or pride, or faith, or 
efforts, or laws of any particular people, will be the 
accepted measure and test of values. 

SPECIE PAYMENTS. 

This brings me to inquire: Can we now restore spe¬ 
cie payments? It ought to be done, and the fiscal pol¬ 
icy of the country should be turned in that direction 
as soon as possible, consistently with the best interests 
of the people. That object should be kept in constant 
view as one of supreme moment to the country and 
the people. But can it be accomplished now? In obe¬ 
dience to the convictions of my judgment, 1 answer 
emphatically, no. It cannot be done now. It is not 
financially nor indeed physically, possible. The coin 
is not in the country. It could not be speedily pro¬ 
cured and brought here in sufficient quantity without 
producing financial convulsions in every civilized na¬ 
tion. A mere declaration of resumption would be 
simply disastrous folly. In 1862 we had at least $200- 
000,000 in coin. Since then there have been imported 
into our country at least $200,000,000, and produced 
from our mines not less than $700,000,000 more. We 
have therefore owned during the last twelve years 
over $1,100,000,000 in the precious metals. Now we 
have the poor pittance of $140,000,000 in our country. 
The rest has gone to abide in and bless countries where 
it is more wisely appreciated. We must, therefore, as 
a condition precedent to safe and enduring resumption 
adopt some public policy that will enable us to at¬ 
tract to, retain in, and disseminate throughout our 
country, about $260,000,000 additional supply of the 
precious metals. This is no impossible task. It is 
practicable, but only by the aid of the steady guidance 
of clear and far-reaching statesmanship. 

COIN AS A BASIS. 

It should be remembered that resumption needs 
more coin to inaugurate it than to maintain it after¬ 
wards. .Once re-established on such a basis as inspires 
popular faith and confidence in its maintainance, a 
less amount of coin will suffice to maintain it. Hu¬ 
man experience has not enabled any person or author¬ 
ity to pronouce ex cathedra the exact relation that 
ought to exist for safety and convertibility between 
the paper and coin currencies of any country. I be¬ 
lieve the true test to be the limit of a country’s capac¬ 
ity under wise and stringent laws, to maintain the 
constant convertibility of its currencies. Any coun¬ 
try may be said to need and may advantageously 
use as much currency of all kinds as its authorized in¬ 
stitutions can issue upon ample securities and keep 
convertible at all times into gold and silver. Our own 
experience in the past and the experience of the lead¬ 
ing commercial nations for a hundred years, furnish 
us no better or surer test. The practical application 
of this principle furnishes at once a test of amount 
and a means of elasticity or prompt expansion, to 
suit the demands of business. 

DISTRIBUTION OF THE CURRENCY. 

It is not a question of distribution of currency; that 
can only be wisely made under the sole guidance of 
the natural laws of business, trade and commerce. 
Congress can no more distribute the money of the 
country according to population than it can the prop¬ 
erty of the people, or the rains that fall upon the 
earth, or regulate the precession of the equinoxes. 
Nearly all the currency of Great Britain is issued by 
the Bank of England, in London, and that of France 
by the Bank of France, in Paris, and that in Germany 
chiefly by the Bank of Prussia, in Berlin, but the cur¬ 
rency does not remain in those cities. It goes, on the 
contrary, by a law as inexorable as that of gravitation, 
wherever the business, the productive capital, the ex¬ 
changes of the country, require it. Almost its only 
use is as an instrument of exchange. Exchanges are 
most numerous and extensive where capital is most 
abundant, productive and active. The channels and 
abiding places of currency are therefore never deter¬ 
mined by law of Congress, but always by the self- 
created laws of money, trade, production, business. 
If the United States had but one bank, and that were 
located in this modest city of Seymour, and had sole 
authority to issue the currency of the country, that 
fact would not enrich Seymour, or our district, or 
Indiana, or the West, or impoverish the East, because 
the currency would inevitably go where the laws to 
which I refer would take it. Congress can no more 
distribute the paper currency of the country than it 
could the gold and silver, and the latter is an absurdity 


| never attempted, or demanded. Congress may by law 
extend to a few individuals the advantages of the 
present monopoly, but not to the people generally. 
What the people want is a currency that monopoly 
cannot control. 

FREE BANKING. 

Much is said of free banking, and if it could be es¬ 
tablished on the true basis, it would result in inculcu- 
lable benefits to the people. But the only safe, ration¬ 
al, and unalterable condition of free-banking should 
be that every bank shall at all times maintain the 
convertibility of its notes into gold or silver on de¬ 
mand, and this duty should be enforced by rigid law, 
and the interests of the people thereby closely guarded. 
Such a system, of banking and currency would be be¬ 
neficent indeed, and would practically aid in the use¬ 
ful and natural distribution of the currency, and 
would also secure so much of practical elasticity as is 
possible in any good and sound currency. 

In view of these elementary principles, any legisla¬ 
tive pledge of immediate resumption would be a mere 
vain and empty boast. Something else must be done 
to prepare the way. Radical changes, both in laws 
and policy, are indispensable as a basis for improve¬ 
ment. These changes should be made to take effect 
gradually and firmly, without shock, or surprise or in¬ 
justice. 

NATIONAL BANKING. 

The National Banking law, as it now exists, is a law 
forever to prevent the resumption of specie payment. 
And such also is the legal tender act, which never was 
better than a trick of unconstitutional legislation to 
give respectability to a bad currency and make it a 
more effective instrument of robbery. The National 
Bank Act requires no redemption by the banks of their 
notes, except by payment in other notes as much dis¬ 
honored and depreciated as theirs. That is an empty 
form, and a mockery of the true idea of convertibility. 
Then let Congress declare by deliberate enactment 
that, at the end of some definite and reasonable time, 
the legal tender act shall cease to be law, and enact 
that every National Bank shall redeem its notes on 
demand in coin, and that each failure thereafter to re¬ 
deem on demand shall be deemed an act of bank¬ 
ruptcy, and that, in the meantime every bank shall 
begin and gradually carry on the accumulation of a 
sufficient coin reserve in its vaults, preparatory to the 
actual commencement of redemption. In this way a 
beginning at least may be made in the work of 
preparation. Prior to 1861 no bank in the country 
dreamed of escaping from or neglecting this vital 
condition of its being, Why should they now ? Have 
they not been permitted to disregard, and to make 
profit by disregarding in this important matter, 
the essential principles of safe and honest banking 
long enough ? Their legalized exemption from the 
true laws of finance has already continued too long.' 
Their munificent franchises have been profitable be¬ 
yond precedent in the past. Their rewards for all 
their boasted services to the country have been most 
generous. They ought now to be willing to be just, 
and to make good their promises to pay, after full and 
ample time for preparation. The people of this coun¬ 
try ought not to suffer dishonor and loss in their cur¬ 
rency perpetually merely to magnify the profits and 
prolong the hurtful privileges of a mighty brotherhood 
of corporations. 

STATE BANKS. 

But it would be better and more just to the people if 
Congress would declare the absolute repeal of the 
National Banking laws, to take effect at a fixed and 
certain period hereafter, and of the legal tender act, 
and thereby give back to the States the regulation of 
banking within their respective limits. The banks now 
national would then seek refuge and reorganization 
under the laws of the States. And the States would 
enact their laws in the light of the valuable although 
exp nsive financial experience of the country since 
1861, and especially under the wise and supreme com¬ 
mand of the constitution of the United States, that 
“no State shall make anything but gold and silver coin 
a tender in payment of debts.” Then the way to sure 
and enduring resumption would be opened. On this 
most fortunate and philosophical provision was based 
the safety and success and life-giving power of our 
currency prior to the war. It is to me matter of pro¬ 
found regret that at the close of the war, Congress did 
not apply that prohibition to the currency of the Na¬ 
tional Banks, and hold itself bound by the same prohi¬ 
bition. The Supreme Court at one time adjudged that 
to be the duty of the Government, but afterwards, 
other under influences, it overruled that judgment. 
The people of the country ought to renew it. 

GREENBACK CIRCULATION. 

If these reforms cannot be accomplished, and the 
country must recieve its currency from Congress, then 
there should be a complete and perpetual divorce be¬ 
tween the National Banks and the currency, and Con¬ 
gress should alone supply the latter to the people, and 
to that end it should substitute its own bills for the 
National Bank notes, and put them into circulation in 
redemption of bonds, and thereby, as some compensa¬ 
tion to the people for a bad currency, save many mil¬ 
lions of dollars in taxation to pay interest on the pub¬ 
lic debt. 













V 


FINANCIAL RECORD. 

"WE NEED ONE THING BESIDES MORE MONEY, AND THAT IS BETTER MONEY .”—Senator Zaeh. Chandler. 

VOL. I. FRIDAY, AUGUST 14, 1874. NO. 28. 


The Financial Record will be continued until further no¬ 
tice, and will be sent free of postage, to all perspns who will re¬ 
mit 50 cents to the publishers. All editors who receive it are 
invited to send their papers in exchange. It will no longer be 
published by the American Social Science Association, 
hut for the present, as heretofore, communications respecting 
it may be addressed to the Secretary of the Association, F. B. 
Sanborn, No. 5 Pemberton Square, (Room 21,) Boston; and all 
exchange papers, public documents, etc., may be forwarded to 
the same address. 


Financial Events and Possibilities. 

A table has been published showing the aggregate 
appropriations made by Congress during the last three 
sessions. The totals are as folio tvs: 


For the year ending June 1873.§154,216,751 

“ “ “ “ 1874. 172,290,700 

“ “ “ “ 1875. 155,030,491 


The result of which is that there is an apparent in¬ 
crease of nearly a million as compared with 1873 and 
a saving of seventeen millions as compared with 1874. 
But the details throw further light on the matter. In 
the first place the deficiencies were smaller the last 
year than in either of the others, and if these were 
subtracted the real increase for the year 1875 as com¬ 
pared with 1873 would be three and a half millions, 
while the saving from 1874 would be reduced to ten 
millions. The “sundry civil expenses” are almost 
seven millions more in 1875 than in 1873, but they are 
five millions less than in 1874. The army and navy 
combined are nearly the same charge as in 1873, but 
there is a saving of six millions from 1874. Most of 
the other appropriations show small changes, but they 
are generally in the direction of economy. 

There is no new evidence as to the working of the 
redemption feature of the new currency law. The 
weekly offerings for redemption to date, so far as we 
can make them up from the irregular treasury reports, 
are as follows: 


Week ended July 11.§2,862,070 

« “ 18. 2,737,390 

“ “ 25 2,241,682 

“ August 1. 3,139,832 

« “ 8 2,297,362 


It will be observed that the amount offered last week 
was lower than that of any other week with a single 
exception, but this may have been merely accidental. 
Up to last Saturday there had been about §13,300,000 
redeemed. At this rate the average circulation of a 
bank note would be two years and seven months, 
which is certainly not very lively redemption. Be¬ 
sides, we may now expect to see the amount falling 
off as the money market tightens. 

Senator Windom of Minnesota, is reported to have 
remarked that during his whole public life he had 
never before so misconceived the opinion of his con¬ 
stituents as on the currency question. He had been 
traveling in his State since Congress adjourns and he 
had found but very few who were in favor of inflation. 
This speaks well for the intelligence of the people of 
Minnesota, and also for Mr. Windom’s candor. He 
voted generally with the inflationists at the last ses¬ 
sion, but facts are too much for his pride of opinion. 
We do not know whether Mr. Windom is one who 
deems it his duty to obey what he believes to be the 
will of his constituents, irrespective of his own opin¬ 
ion. If so he will be found on the right side hereaf¬ 
ter. We prefer to believe that he voted in opposition 
to his better judgment in order not to defeat what he 
supposed to be the desire of his supporters and that 
henceforth his good sense and his desire to please will 
draw him in the same direction. 

Dan Voorhees, “the tall sycamore of the Wabash,” 
has “answered Morton.” They are both inflationists, 
they are both of them politicians and demagogues. 
Voorhees, however, goes a little beyond Morton in his 
bid for popular support. He advocates the payment 
of five-twenties in greenbacks in spite of the national 
pledge. Morton would have done so but for the last 
promise, that of 1869. Morton confesses that he 
would like to be dishonest but he is restrained by a 
pledge, and Voorhees cares as little about keeping the 


national word as he does about acting in good faith. 
Whether the one is superior to the other in political 
morality it is not our province to decide. Meantime 
we have seen no explanation of the discrepancy be¬ 
tween the two reports of the Senator’s speech. In the 
more probable event that he wished to say more to 
the people he was addressing than he cared to have go 
upon the record, we fear that we cannot speak of the 
performance in language greatly to the statesman’s 
credit. 

The currency question is really splitting the Demo¬ 
cratic party in Illinois. Some weeks ago a call was 
issued by the Democratic State Central Committee for 
a convention on the 26th of August, of all who held 
certain principles, of which the first was at follows: 

“Restoration of gold and silver as the basis of the 
currency of the country; a speedy resumption of spe¬ 
cie payment of the national indebtedness in money 
recognized by the civilized world.” 

The call was not for a Democratic convention, but 
in reality organized a new opposition party. The 
war horses were indignant. The party had been sold 
out. They did not believe in hard money, but they 
did want more money and they wanted it softer. Meet¬ 
ings were held in several places, and the Bourbon, 
inflationist members of the State Committee hav¬ 
ing held a meeting, a call has been issued for a 
straight-out Democratic convention at Springfield, on 
the 25th inst. The call is headed “White men to the 
front!” it charges the majority of the Committee with 
having “ignominiously and ingloriously surrendered 
both the principles and the name” of the party, and 
summons all “true Jeffersonian Democratic voters” to 
the rescue. It is a very pretty quarrel, and can only 
result in bringing about that which we most desire,— 
additional prominence to the currency question. 


Congressman Holman, of Indiana, has declared him¬ 
self in a speech from which we make some extracts. 
Like most of the politicians of the latitude and longi¬ 
tude of Indiana, he is for hard money and inflation,— 
that is, he is in an anxious state of uncertainty which 
way the cat will jump, and he takes up a position 
where he can consistently go in either direction. This 
is statesmanship as understood and practiced in Indi¬ 
ana. Strange as the statement may seem, we believe 
it to be a fact that even Senator Morton has nowhere 
put himself on record, (officially, at least,) for any pol¬ 
icy that would prevent his joining the hard money par¬ 
ty at the next session of Congress, and fighting infla¬ 
tion as vigorously as he advocated it at the last session 
To do so would only be in entire consonance with the 
principles of Indiana statesmanship. 

Another Indiana Democrat’s Position. 

[From Judge Holman’s speech at Connersville, August 4.] 

Briefly, my position on the finance question is this: 
(I owe this explanation to you as your candidate for 
Congress.) 

1. I am in favor of abolishing the bank system, 
withdrawing three hundred and fifty-four millions of 
bank notes, and paying a portion of the debt by the 
issue of a like amount of greenbacks. 

2. I am in favor of repealing the act of ’69. There 
is no bad faith in doing this. There is bad faith in 
not doing it. I would do no injustice to capital or 
capitalists, but I propose that they shan’t run this 
government. 

3. As to the volume of The currency, I only say 
this: President Grant vetoed a bill which tended to 
increase greenback circulation eighteen millions, and 
the national bank note circulation forty-six millions. I 
voted against that bill without a moment’s hesitation, 
because it increased the national bank note system. 

• The next two bills were plainly intended to increase 
the national bank notes and decrease the amount of 
greenbacks, at the rate of 40 per cent, on the issue of 
national bank notes. I voted for the interconvertible 
bond system which formed part of this bill, but I am 
not certain yet that this system was right. When the 
last measure was proposed which took away fifty-five 
millions from New England and gave it to the West, 
I voted for it because it virtually took away money 
from the banks and gave it to the people. Contrac¬ 
tion is impossible while we pay as a people 551 mil¬ 
lions of taxes. Before we come to specie payment we 
must reduce taxation. I like hard money myself. _ I 
studied finance under Tom Benton, but contraction 
is impossible on a basis of 551 millions of taxes. 


Spirit •of the Press. 

[Ohio Statesman, Democratic.] 

When the act was passed in March, 1869, pledging 
the faith of the nation to the payment of the bonds in 
gold, the Cincinnati Enquirer proclaimed it as a breach 
of faith on the part of Congress toward the soldiers, 
whose pensions were paid in greenbacks, and the labor¬ 
ing classes of the nation, and demanded the repeal of 
law. . . .The Enquirer in an able article changing front 
upon this question, and in favor of paying the bonds 
in gold, in last Tuesday’s edition,.says: “To insist to¬ 
day upon the payment of these bonds in legal-tenders 
is not, it seems to us, in the largest sense expedient.” 

[New York World.] 

The Enquirer, its bogus Democracy about to be dis¬ 
avowed by the Ohio Democratic Convention, now calls 
attention to the fact that the greenback or gold ques¬ 
tion, by the reduction of the amount of outstanding 
bonds,has been reduced to one-eighth its magnitude 
in 1868; that the premium on gold has dropped from 
forty to ten per cent; that it is now a matter of seventy 
five, not six hundred millions saving; that even the 
law is not the same as in 1868, for if “prior to the act 
of March, 1866, the faith of the nation was regarded 
as pledged to the payment of the five-twenties in legal 
tenders,” nevertheless since then “the faith of the na¬ 
tion has been regarded as pledged to the payment of 
those bonds in gold.” “It was robbery, but the law 
was passed.” The law is changed. “The fact is altered. 
Other things are now more important.” “Time has 
made the payment of the five-twenties, a question of 
minor importance, and has made the demand for the 
enforcement of the original contract provocative of 
needless hostility to the cause we wish to aid.” 

[Cincinnati Enquirer.] 

The Enquirer has not changed front, has not been in¬ 
consistent, has abated not a jot or a tittle of its belief 
concerning the meaning of the five-twenty bonds, or 
touching tho outrageous character of the law of March 
1869, relating to their payment. The articles in the 
Enquirer which have elicited these accusations of incon¬ 
sistency, and the very charges themselves, it will be 
seen, prove this. We repudiate nothing, retract noth¬ 
ing, change nothing. 

The law of 1869, passed over the protest of the Dem¬ 
ocratic party, infamously imposing a lawless burden 
upon a deeply indebted people, did, notwithstanding 
its outrageous character, change, to some extent, the 
National pledge, and therefore embarrassed the Demo¬ 
cratic party which, for more than seventy years, has 
steadfastly clung to the National pledges. To say so 
is not inconsistency. It is often best to conform to an 
unjust bond. When the question immediately con¬ 
fronted us whether it would be expedient for the Dem¬ 
ocracy of Ohio to lift into importance a question which 
time had made relatively unimportant, we said, and 
still say, it is not worth while. This is all we have 
said, and there is no inconsistency in any of it. 

[Cincinnati Gazette.] 

Mr. McCulloch has the distinction of having been the 
only Secretary of the Treasury (since the Democratic 
regime went out, leaving it broken down) who had 
clear ideas and a well defined policy, which he pursued 
consistently and boldly. This makes him, in compari¬ 
son with the other helpless drifters, a great financier. 
He came into the Treasury when his predecessor had 
flown all the paper money kites, and had exhausted 
every shift for keeping debt floating. The legal-ten¬ 
der notes had been issued on the condition that they 
were a resort justified only by the national extremity; 
a forced loan, excusable only by the requirements of 
the public safety, which is the supreme law, and that 
as soon as the public peril was over they should be 
paid, and the currency should be reduced to the specie 
basis, with specie the only legal-tender. Mr. McCul¬ 
loch believed these pledges to.be sincere. They were 
the popular sentiment of the time. As soon as the war 
ended, and public credit was assured, he set at work to 
carry them out. 

[St. Louis Republican.] 

Our State will shortly receive a large addition to its 
supply of currency. It will come, not by act of Con¬ 
gress, but through the industry of its people. We 
have no means of estimating the present wheat crop of 
Missouri, but all estimates put down at a large figure. 
The counties along the Pacific, and the Atlantic and 
Pacific railroads alone will send 85,000,000 bushels to 
market; perhaps the remainder of the State will send 
enough more to swell the aggregate to 200,000,000 
bushels. This will bring eighteen or twenty million 
dollars of currency in exchange for our wheat crop 
alone. 





























94 


THE FINANCIAL RECORD. 


[Philadelphia North American.] 

The Democracy of Indiana are entitled to the thanks 
of the people. They have signified their disapproval 
of the ancient policy of their party, which largely relat¬ 
ed to obtaining votes by false pretences. The leaders 
elsewhere are stirred with indignation, which, under 
the circumstances, is natural. No man likes to have 
his secret determination made public. A Democratic 
platform, remarkable for what it expresses rather than 
for what it represses or suppresses, is an anomaly. 

[Baltimore American.] 

The immediate repeal of the legal-tender act is Mr. 
Atkinson’s specific. The homely sense of the plain 
people of thp country is opposed'to the application of 
any such a remedy. Everybody admits that an early 
resumption of specie payments is most desirable, but 
there are few persons who recommend contraction by 
destroying one-half of our currency. There was a 
great deal move merit in Mr.Greeley’s celebrated axiom, 
“The way to resume is to resume.” Mr. Greeley did 
not propose the immediate canceling of the Treasury 
notes, but the redemption of such as were presented. 
He contended that the annPuncement of a willingness 
and readiness to pay was all that was necessary to 
bring us back to the specie standard. Paper money is 
more convenient for the purposes of business than 
gold or silver, and adding this advantage to the patriot¬ 
ic forbearance which the people might be expected to 
exercise towards the Government, Mr. Greeley thought 
that immediate resumption was practicable. We pre¬ 
fer the dead Greeley to the living Atkinson. 

[From the Independence (Kan.) Democrat.] 

The Democrats in Indiana, as elsewhere, recommend 
a return to specie redemption, and specie standard of 
value, at the earliest practicable moment, so as not to 
produce any financial crisis by the change. The In¬ 
diana Democrats are opposed to the monopoly of the 
national banks, and in this particular, they agree with 
Democrats everywhere. The resolution about paying 
the five-twenties in greenbacks, is a “tub to the whale.” 
If greenbacks are equal to specie, how can anybody 
object, or what will the country gain thereby ? The 
fact is, the only way in which five-twenties, or any 
other bonded debt of the nation will be paid, will be by 
the exchange for other bonds, at longer times and at 
lower rates of interest. If the administration act 
wisely, and take advantage of the markets, and do not 
have to pay too much to rings and favorites, the prin¬ 
cipal and interest may be greatly lessened. But the 
national debt will never be paid, until the coming of a 
second Andrew Jackson. 


The Treasury and the New Currency Law. 

[From the N. Y. Financial Chronicle.] 

It is impossible to overrate the importance of an am¬ 
ple treasury balance of currency. Now is the favor¬ 
able 'time for its accumulation. For many months 
past so heavy a balance of currency has not been held 
in the treasury. Besides other advantages which hav% 
been often expounded, this accumulation of currency 
in the treasury forms one of the bases of support for 
the theory that we shall have, next fall, no embarrass¬ 
ing pressure in the money market. If the treasury, 
like a reservoir, can hoard up greenbacks and divert 
them from the active circulation during the idle 
months of summer, and if it can let out timely streams 
of currency when it is wanted in the fall, one of the 
chief embarrassments of the money market will be 
prevented. With regard to the gold balance, it has 
been heavily drawn upon by the July payments of in¬ 
terest, which amount to §25,039,785. This is the 
heaviest outflow of interest for the half year. That 
of May stands next, and amounts to §15,330,000. To 
meet his July interest Mr. Bristow has paid out 11 
million of gold notes, and has also paid out all his cus¬ 
toms receipts of coin for the month, besides depleting 
his gold balance by three millions. The total gold 
owned by the treasury is now down to 37 millions, 
against 27 millions of accrued interest. These fig¬ 
ures show how far we have departed from the safe 
old rule of keeping a surplus of coin in the treasury 
as a support to the greenback circulation. No part of 
our present coin balance in the treasury is so held. 
The amount of coin owned by the treasury has rarely 
exceeded of late the amount of interest actually ac¬ 
crued. 

Turning to the unfunded debt, we find its amount to 
be 417 millions. This part of the public obligations 
has lost its hold on the popular anxieties since the re¬ 
cent law .forbidding the Secretary from augmenting 
or diminishing the greenbacks. That law resumes 
and vests in Congress once more the power over the 
currency which the Secretary of the Treasury held un¬ 
der the legal-tender act and its several amendments. 
For some years the Secretary was unchecked in his 
exercise of these powers which were not very articu¬ 
lately defined. The law of 1866 limited the power to 
contract the currency to four millions a month. The 
law of 1868 stopped greenback contraction altogether. 
And the law of 1874 has put an end to all hope of future 
greenback expansion. 

A Kansas Democratic newspaper takes the same 
view expressed in tliis last sentence and says: • 


The great currency excitement has passed away. 
There has been no change of base. No new banks 
have been created west of the Alleghany Mountains. 
None been demanded. These facts, go to show that 
none were needed, for if they were needed they would 
be asked for, and can be had for the asking. The 
compromise law is ample to give the Western politicians 
all the banking facilities they may need to carry on 
the next political campaign. All this cry about more 
money in the shape of currency for the AVestern farm¬ 
ers was a humbug; only intended to pull the wool 
over the eyes of the Western agriculturalists, to keep 
them from turning their attention to the real political 
evils that are eating up the substance and- destroying 
the liberties of American people. There are some 
simple minded people that think the currency inflation 
is still an open question. It is dead. It served its 
purpose, and has subsided, and we trust will never be 
heard of again. 


Senator Morton’s Last Speech. 

SOME EXTRACTS AND COMMENTS. 

The financial question was first presented to Congress 
at the last session by the President in his December 
message. In that message he asserted that the cur¬ 
rency of the country, based as it was upon the credit 
of the country, was the best that has ever been de¬ 
vised; that the volume of currency was not more 
than sufficient for the dullest season of the year; that 
since 1870 there had been an actual contraction to the 
amount of sixty-three millions, and that there had 
been a much larger comparative contraction by the 
growth of population, trade, and commerce, the devel¬ 
opment of our territories and the organization of free 
labor in the South. He argued the necessity of return¬ 
ing to specie payments, but declared that it was im¬ 
possible until our exports, exclusive of gold, paid for 
our imports, interest abroad, and other specie obliga¬ 
tions. As a measure of expansion and relief he re¬ 
commended that the secretary of the treasury should 
be authorized to increase the issue of the existing 
national banks 40 per cent, upon their filing additional 
bonds to that amount upon which new currency should 
be issued dollar for dollar. This would have authorized 
an expansion of §146,500,000. 

Without going into a history of the discussions, 
which lasted throughout the winter mouths, it is suffi¬ 
cient to say that in April i currency bill passed both 
houses, containing fiut two sections. The first declared 
that the maximum amount of legal-tender notes should 
be §400,000,000, jusfwhat had been claimed by Secre¬ 
taries McCullough, Boutwell, and Richardson, and by 
the President himself, but which had been disputed 
vehemently in Congress and out of it. It simply de¬ 
clared the law to be what the President and secretary 
had assumed it to be. The word “maximum” means 
the greatest. It did not mean the precise amount, but 
simply the amount beyond which the issue could not 
go; and did not make it obligatory upon the secretary 
to issue another United States note, and left his dis¬ 
cretionary power just what he had claimed it to be. 
The second section provided for the issue of §46,000,- 
000 of additional national bank-notes to be apportioned 
to the States of the West and South, having less than 
their proportion of national bank currency,-have been 
apportioned to southern states that would have taken 
it up very slowly; so that any danger to have resulted 
from a sudden expansion of the currency was of the 
most visionary character. This bill was vetoed by the ' 
President. 

THE BILL THAT BECAME A LAW. 

Just before the' close of the session a bill was passed 
by a vote of more than two-thirds of each house, and 
signed by the President, fixing the amount of legal- 
tender notes at 382 millions for permanent circulation, 
and taking from the secretary of the treasury the 
power to retire the twenty-six millions of such notes 
which had been issued after the commencement of the 
panic, as a part of the legal-tender reserve, and which 
it was asserted by the secretary he had the power to 
retire, and should do so out of the first surplus rev¬ 
enues. It provided for taking fifty-five millions of 
national bank currency from the Eastern States having 
an excess over the proportion they were entitled to 
under the law, to be distributed to the states of the 
West and South that had less than their proportion. It 
further provided for abolishing the legal-tender re¬ 
serves which the banks were required by law to keep 
on account of their circulation. Their bills were am¬ 
ply secured by the deposit of bonds; and from the first 
the reserve on circulation had been regarded as absurd 
and unnecessary. This would set free and throw into 
circulation not less than forty millions of legal tender 
notes which before were required by law to be locked 
up in the vaults of the banks, and is an expansion of 
the circulation to that amount. Under the vetoed bill 
the expansion depended upon the establishment of new 
banks which would have been a slow process, espe¬ 
cially in some of the Southern States, but under the pre¬ 
sent bill it is immediate, or so soon as the demands of 
business require the use of more money. 

It is not expansion by creating a new currency, but 


by putting into circulation some forty millions of ex¬ 
isting currency which had been locked up in the vaults 
of the banks. The effect of this bill in expanding the 
volume of currency in circulation was distinctly re¬ 
cognized by all who voted against it, and those who 
voted against it did so for that reason. The bill ex¬ 
tinguished the threat of contraction which hung over 
the business of the country like a suspended sword, 
and is an explicit declaration against that policy. The 
specie payment furor that started out with a demand 
for immediate contraction and resumption has dwind¬ 
led down into a harmless jingle of phrases about “re¬ 
sumption to be effected without contraction,” and 
“after the effects of the panic have passed away,” and 
“whenIt can be accomplished without injury to the 
business of the country,” or “as soon as wise states¬ 
manship can safely reach that result.” 

THE DEMOCRATS AND THE BANKS. 

The national banks afford a currency that is per¬ 
fectly secured, in which everybody has entire confi¬ 
dence, that is of uniform value in every part of the 
United States, that is not easily counterfeited, and is 
unquestionably the safest and most satisfactory bank 
currency this country has ever had. The proposition 
to destroy this banking system involves a radical 
change in the finances and business of the country, 
the colleetion and withdrawal of more than §900,000,- 
000 of loans which these banks have made to the peo¬ 
ple, the vast derangement, contraction and distress 
which such an event must produce upon the business of 
the country, and years of doubt and experiment before 
another system can be established in its place. The 
principal reason which has been given for this proposed 
change is that the government is paying interest to 
these banks upon their bonds, which it is alleged is an 
increased burden and expenditure. This argument 
ought not to deceive any intelligent person. The bonds 
which the banks deposit with the government as a se¬ 
curity for the redemption and payment of their notes 
they have to buy in the market, just like anybody else, 
paying the same prices. If these bonds were not held 
by the banks they would be held by others, for they 
were already in existence before the banks purchased 
them; and whether the interest is paid to the banks 
or private parties, as the holders of these bonds, can 
make no difference to the government. The banks 
are required to purchase these bonds and deposit them 
with the government as security for their notes, thus 
making their notes safe beyond all question, so that 
neither the people nor the government can lose any¬ 
thing by them. 

But according to this Democratic resolution, the 
government should issue §354,000,000 of additional 
greenbacks for circulation instead of the bank notes. 
These additional greenbacks will be a public debt to 
that amount, though not drawing interest, and their 
very next resolution declares that the government 
shall return to specie payments as soon as the business 
interests of the country will permit. It requires little 
reflection to see that these two resolutions are exactly 
contradictory, and that the first puts it out of the 
power of the government to comply with the second. 
If the government cannot procure the gold wherewith 
to redeem §382,000,000 of greenbacks, the present 
amount in circulation, how will it be able to redeem the 
greenbacks when the volume shall have been increased 
by adding §354,000,000 more in place of the national 
bank currency, making §736,000,000 of greenbacks ? 
The difficult}’ of returning to specie payments will be 
increased nearly 100 per cent., and according to the 
generally received theories this will largely add to the 
depreciation of the greenbacks. 

THE PLEDGE OF 1864. 

In the act of 1864 a distinct pledge was given to the 
creditors of the government that the whole volume of 
greenbacks should never exceed §400,000,000—the 
amounts authorized by the acts of 1862 and 1863. The 
recent bill which passed Congress and was vetoed by the 
president, assumed tliis pledge to be binding, and fixed 
the maximum amount of greenbacks at §400,000,000. 
The proposition now made by the democracy to in¬ 
crease the issue of greenbacks §354,000,000, is beset 
with difficulties and *contradictions on every hand. 
When the greenback acts were passed in 1862 and 
1863, they were denounced by the leaders of the dem¬ 
ocratic party, embracing the oldest and most distin¬ 
guished members of tliis convention, as unconstitu¬ 
tional, upon the ground that Congress had no power 
to make anything but gold and silver a legal-tender in 
payment of debts. When Chief Justice Chase de¬ 
livered the opinion of the majority of the Supreme 
Court to the effect that these acts were unconstitution¬ 
al, lie was sustained by the leaders of the Democratic 
party throughout the United States; and when after¬ 
ward President Grant had appointed two more judges 
upon that bench, and this decision was reversed and 
the constitutionality of those acts affirmed, he was 
charged by the politicians and press of the Demo¬ 
cratic party everywhere with having packed the 
Supreme Court for the purpose of obtaining a decision 
in gross violation of the constitution of the United 
States. Now, in a time of peace, long after the war 












THE FINANCIAL RECORD. 


95 


is over, we find a portion of the same politicians urg¬ 
ing that the number of greenbacks should be doubled, 
and that these new greenbacks should be used in pay¬ 
ment of the five-twenty bonds issued and sold by the 
government years before. 

Soon after the inauguration of Gen. Grant in March, 
1869, Congress passed an act declaratory of the law, 
intended to settle the whole question, in which it was 
provided that five-twenty bonds were payable only in 
coin, principal and interest. This act was intended to 
be a settlement of the controversy as to the mode of 
paying those bonds, and was generally received as 
such. I accepted it as a final settlement of the ques¬ 
tion, and believe it must now be so received. Since that 
time these bonds have been bought and sold upon the 
express declaration of the government that they should 
be paid in coin, and the government is estopped from 
now asserting the right to pay them in any other way. 
Whatever may have been its right to pay them with 
the original greenbacks, that was qxpressly waived 
by this act, and the whole world was invited to deal 
in them upon the pledge that they should be paid in 
coin. The Democratic party, therefore, involves a 
double repudiation; first, by proposing to make a new 
issue of greenbacks with which to pay the five-twenty 
bonds, and secondly, by proposing to repeal the pledge 
given in the act of 1869, upon the faith of which those 
bonds have been bought and sold for more than five 
years. 

THE PRESENT SITUATION. 

It may be safe, therefore, to predict that the settle¬ 
ment of this question by the act of 1869 will not be 
disturbed; that it will not be in the power of the demo¬ 
cratic party of Indiana to reopen the question, and 
that the national bank system will not be abolished. 
It may also be assumed that the pledge contained in 
the act of 1864, that the whole amount of greenbacks 
should never exceed §400,000,000, will be accepted as 
valid and continuing, and that the policy of making 
an issue of greenbacks beyond the §400,000,000, either 
• as a substitute for national bank notes or for any other 
cause, has been abandoned, and in fact that the vol¬ 
ume of greenbacks will never exceed §882,000,000, the 
amount now in circulation. And the greenback prob¬ 
lem which remains to be solved is the redemption of 
these notes in coin at the earliest practicable period, 
as promised by the act of 1869. That this period is 
not the present , seems to be conceded by nearly all, and 
that it will not arrive until after the effects of the 
panic have passed away, good times have been re¬ 
stored, and the balance of trade has ceased to run so 
strongly against us. While the fifty-five millions of 
national bank currency which the law provides maybe 
taken from states in the East and given to those states 
in the West and South having less than their proportion 
or than what they need, may not be taken up very 
rapidly, and, in fact, cannot be until there shall have 
been a revival of business and prosperity, yet it will 
be taken at no distant period, and the demand will be 
renewed and finally granted for the establishment of 
what is called free banking and the removal of the 
monopoly feature of the national banking system, 
which has ever been its blemish, and has largely con¬ 
tributed to whatever of unpopularity the system may 
have. Notwithstanding all that has been said against 
our currency as being depreciated and fluctuating rag 
money, everybody knows that it is a good currency, 
under which the country has prospered as it never did 
before, and that its further improvement will be natur¬ 
al, steady and healthy. 

COMMENTS OF THE PRESS. 

[Chicago Times.] 

On the questions of finance and revenue, presented by 
the political issue before the country, the Hoosier sena¬ 
tor’s argument is that of a special pleader who has to 
contend both against an opponent and against himself. 
There is really in Indiana, no organized opposition to the 
congressional policy of perpetual shinplaster swindling 
and tariff and bounty swindling, which the senator him¬ 
self has so persistently championed. The senator now 
says of the Pendleton repudiation scheme: “Tome, this 
proposition seemed to involve bad faith ahd repudia¬ 
tion.” Nevertheless, he favored it in 1868; favored a 
proposition which to him “seemed to involve bad faith 
and repudiation.” At present, seeing that the Indiana 
“democrats” again favor it, he is inclined to think he 
does not favor it. He probably deems it essential to 
have some point of difference between himself and 
his political followers, and Hendricks and his political 
followers; else the only contest would be that mere 
pqfsonal squabble for the spoils of office which con¬ 
stitutes fully nineteen-twentieths of all the contest 
there is in Indiana anyway. 

[Ciuciunati Enquirer.] 

Morton’s discussion of the currency question is elab¬ 
orate and skilful. He paints the excellences of the 
first financial bill which passed Congress, and adds the 
biting rebuke, “This bill was vetoed by the President,” 
Morton, speaking for a party which in his State has 
unmistakably declared in favor of expansion of the 
currency, talks at times consistently and at times with 
amusing inconsistency. He says that there is a wrong 
time to do a right thing, and that now is the wrong 
time to take any steps toward returning to-specie pay¬ 


ments. Morton defends the National Banks. So 
much of his advocacy of them as points out the evils 
of an immediate abolition of the system is pertinent 
and tenable, and no more. 

[Chicago Tribune.] 

We do not attach so much importance to the speech¬ 
es of Senator Morton, of Indiana, as we did six 
months ago. The veto of the Senate Currency bill, 
of which he was the most irate and dogged champion, 
“laid him out,” for the time being—indeed, for all 
the time that the currency question shall continue to be 
uppermost in the public mind—and has wholly disquali¬ 
fied him for a Presidential nomination in 1876. The 
speech delivered by Mr. Morton at Terre Haute exhib¬ 
its his usual ingenuity, but comes short of his usual 
audacity. It is, for him, a feeble effort. It betrays 
weariness of mind and paucity of ideas. In his dis¬ 
cussion bf the currency question he gropes and stum¬ 
bles in a pitiable way. 

[Cleaveland Leader.] 

Senator Morton’s address touched upon every polit¬ 
ical question of the day in a clear and comprehensive 
manner. It sounds the key note of his party for the 
coming campaign in Indiana, and, compared to it, the 
address of Governor Hendricks to the Democrats of 
that State sinks into insignificance. It is one of the most 
masterly of the many efforts of Senator Morton, and 
will have a telling influence on the politics of his 
State. 

[Troy, (New York,) Times.] 

The speech contains a review of the proceedings of 
Congress on that subject, in which the peculiar views 
he was in the habit of expressing on the floor of the 
Senate are repeated. We need not say that thay are 
far from meeting our approval. He attempts to estab¬ 
lish the impression that all who voted for the new cur¬ 
rency act, and the President who signed it, “recog¬ 
nized the necessity of increasing the amount of money 
in circulation in order to restore confidence and set 
the wheels of business in motion.” This is very far 
from the truth. Mr. Morton ought to know, if he does 
not, that a great many hard money men gave their 
support to the bill in the belief that its effect would be 
to contract the currency, and others reluctantly ac¬ 
cepted it as a sort of compromise between extremes. 

[Baltimore American.] 

But politicians—and Mr. Morton is a politician, 
though of a higher class than the average—will for¬ 
ever go somewhat astray from fact to suit the particu¬ 
lar audience they are speaking to, and Mr. Morton 
proves no exception to the rule. The Currency bill, 
passed at the late session of Congress, he says was “a 
measure of expansion largely in excess of the bill ve¬ 
toed by the President. And also that, “the monster 
of contradiction which stalked into Congress in De¬ 
cember with insolent air was finally kicked out of it, 
after having expansion crammed down its throat.” 
We hope the senator’s audience knew better than this, 
even if they might wish it were true. Nobody knows 
better than he that although the bill was not just what 
the advocates of national honesty in the straightest and 
quickest way desired, yet they only yielded to it as a 
compromise, and did not do so until they had 
shown Mr. Morton and his expansionist friends that they 
must give way also. Perhaps it was because of the 
veto of Mr. Morton’s financial scheme that he had no 
word for the President. Perhaps it was because he 
has his own eye upon the Executive seat of honor' 


The Indiana Democrats. 

[From the Chicago Times.] 

In voting to pay off thd government bonds in green¬ 
backs, the Hoosier Bourbons have forgotten to say 
whether they want to have the necessary greenbacks 
raised by taxation, or by the easier mode of printing 
them. There is a very wide, not to say vital, differ¬ 
ence between these two modes, and no Pendletonian 
convention has hitherto ventured to commit itself 
squarely to either of them. Individuals of the Pendle¬ 
ton species have committed themselves, some to the one 
mode and some to the other, but they have never, in 
any important convention, managed to express them¬ 
selves distinctly for either the one mode or the other. 

If the greenbacks were to be provided for by taxation, 
“payment” could not, of course, be made much faster 
than at present, unless taxation should be increased. 
A hundred dollars in gold will now redeem a hundred 
dollars in bonds, and the hundred dollars in gold is 
now worth about §109.50 in greenbacks. “Payment” 
in greenbacks, therefore, would save (steal is the right 
word) for the government §9.50 on every hundred dol¬ 
lars of bonds redeemed, or 95,000 on every million. 
If, then, we have a surplus revenue sufficient to enable 
us to redeem §35,000,000 of bonds in gold annually 
(andive cannot expect more than that for the present), 
we can with the same revenue “redeem” §32,850,000 
of bonds in greenbacks—a steal of §2,850,000 a year; 
and save interest to the amount of §171,000 on the 
steal of each year. For the purpose of getting rid of 
the public debt this steal would be trifling, though the 
loss to public creditors would be rather a serious mat¬ 
ter. As the currency would not be depreciated by the 
operation, however, the holders of 5-20 bonds would 


be the only losers, leaving the damage to the public 
credit out of the account. 

If the necessary greenbacks should be provided by 
the printing-press, the case would be very different. 
Instead of its taking some twenty-five years to “re¬ 
deem” the 5-20’s, the whole job could be completed in 
two years or less, and the public creditors would be 
robbed, not merely of the present difference between 
coin and paper, but of the difference which would arise 
from the depreciation of greenbacks to not more than 
one-half their present value. As this depreciation 
would be progressive, corresponding to the additional 
amounts put in circulation, of course those who pre¬ 
sented their bonds for payment first would lose least, 
and those who presented their bonds last would lose 
most. It is probably safe to estimate that the holders 
of 5-20’s would be robbed, from first to last, of two- 
fifths of the amount their bonds call for, the last of 
them losing, perhaps, two-thirds. 

The amount of 5-20’s now outstanding is not far 
from a thousand millions. The issue of an equal 
amount of greenbacks to “pay” the bonds would a 
good deal more than double the present volume of cur¬ 
rency, and probably force the gold premium to 200 or 
more. The robbery of nublic creditors would be in 
proportion to the advance of the premium on coin. It 
would be a mighty fine thing for the government, to 
be sure. There would be a clear gain of five hundred 
niillions or so, upon the supposition that the pro¬ 
gramme would end in the repudiation of the green¬ 
backs, which is a perfectly rational supposition. The 
country is no more likely now to redeem §1,382,000,000 
of greenbacks than it was to redeem one-seventh of 
that amount in continental money after the revolution¬ 
ary war. Another mighty fine thing would be the to¬ 
tal ruin of the public credit. In case of another war 
Uncle Sam couldn’t borrow a dollar on any terms. 


Inflationists’ Column. 

[Cincinnati Enquirer.] 

These are the propositions which are indisputable in 
financial operations: 

First—The amount of money in the country should 
continually increase with the enlargement of busi¬ 
ness and the additions in population. Any thing 
short of that is contraction. 

Second—We should have no currency that is liable 
to exportation, or which is used for any other purpose 
than that of money. 

Third—As we have not by four hundred or five hun¬ 
dred millions of dollars as much currency as we had 
when the war closed, and when eleven States were 
preparing to take it, this is sufficient evidence to show 
that the quantity of money in the country is not al¬ 
ways sufficient • for its business. 

[Philadelphia North American.] 

Our own belief lias been all along that if the whole 
volume of the greenback circulation were extinguished 
and an equal amount of national bank circulation is¬ 
sued to new institutions, there would be a better chance 
of ultimate redemption in specie, and the country 
would experience no inconvenience from the change. 
Indeed a thousand millions of currency could be sus¬ 
tained easily in such a country as ours if it all rested 
upon the same basis as the present national bank is¬ 
sues, being secured by deposits of bonds in the Treas¬ 
ury Department. The principal advantage of this 
increase woujd not be so much in the circulation as in 
the legitimate credit operations of the banks. All the 
business' enterprises of the Republic cluster around 
these institutions, and are fostered and stimulated by 
them, and wherever corporate banking is dwarfed or 
restrained by governmental action, individual banking, 
subject to no regulations whatever, steps in and fills 
the void, with just such liability to danger as the 
Overe'nd-Gurney explosion developed in London and 
the Jay Cooke failure exhibited here. At the present 
time in this great city of Philadelphia, notwithstand¬ 
ing all our corporate banks, the two largest money 
lending concerns are private firms. 

[Atchison (Kan.) Patriot.] 

Did the government have gold or silver to pay when 
it issued the greenback promises ? No, or it would 
have paid the gold instead of increasing the promises. 

Has the government the gold to pay now ? No—nei¬ 
ther has it any method of obtaining the gold. Has 
tills failure to pay gold for ten years past, hurt any¬ 
body or injured any business ? Not in a single instance. 
Since, then, paper is indispensable, what better than 
this, which everybody has confidence in, which entails 
no loss on the holder, and which costs the people noth¬ 
ing in the shape of taxes to pay interest on bonds ? 
We find a legal tender currency in the country, and that 
it is the best, the safest, and the cheapest currency 
that any people under heaven ever possessed. We de¬ 
mand more of this currency, because more of it will 
advance the prosperity and promote the welfare of 
the people. Foreign commerce can take care of itsffif. 
If the foreign merchant does not want our currency 
he need not sell us his goods. There is no compulsion 
about it. We can do without his goods, and be the 
better by it. 












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FINANCIAL RECORD. 

“WE NEED ONE THING BESIDES MORE MONEY, AND THAT IS BETTER MONEY .’’—Senator Zach. Chandler. 


VOL. I. 


FRIDAY, AUGUST 21, 1874. 


NO. 29. 


The Financial Record will be continued until further no- I rnost of the States, it is time 

tice, and will be sent free of postage, to all persons who will re¬ 
mit 50 cents to the publishers. All editors who receive it are 
invited to send their papers in exchange. It will no longer be 
published by the American Social Science Association, 
but for the present, as heretofore, communications respecting 
it may be addressed to the Secretary of the Association, F. B. 

San bom, No. 5 Pemberton Square, (Room 21,) Boston; and all 
exchange papers, public documents, etc., may be forwarded to 
the same address. 


Financial Events and Possibilities. 

The money market seems to be showing the first 
symptoms of the usual tightening observable every 
fall. The New York banks have lost deposits to a 
considerable amount, and they are weaker in their re¬ 
serve than they were at the last preceding statement. 
The loss of reserve, however, results from the large 
withdrawals of specie for shipment. The amount of 
gold and silver sent abroad this year to date is within 
a fraction of a million the same as last year, when, 
however, the amount was smaller than for several 
years immediately before. Another evidence of the 
increased demand for money is seen in the falling off 
in offerings of national bank notes for redemption, 
which were, last week, below two milliou dollars. As 
the money market becomes more stringent, we must 
expect to see this sum become smaller and smaller. 
Government finances, meantime, are in a good condi 
tion. The internal revenue receipts this month up to 
and including the 18th, have exceeded five millions, 
the whole receipts in August, 1873, having been but 
eight millions. 

Some explanation ought to be given of one of the 
weekly treasury returns. Every Saturday night 
despatch states among other things the amount of 
“national bank currency in circulation.” As this 
amount is now above 350 millions, though not as great 
by the way, as it was when the currency law was 
passed, some anxious observers of the working of the 
law have supposed that the lesson of the figures was 
that there has been an inflation. In reality the return 
only indicates the net amount of bank notes issued to 
the banks. To find how much is really “in circula 
tion” there should be deducted all the banknotes, both 
their own and that of others, held by the banks them¬ 
selves. In the aggregate this would make a difference 
of fully thirty-five millions, and perhaps considerably 
more. How it happens that the item has increased is 
easily explained. A few new banks have been formed 
and currency has been issued to them. Meantime 
quite as many old banks have deposited legal tenders 
to redeem their circulation and taken up their bonds. 
But the redemption of these notes is alow; and al¬ 
though they are cancelled as fast as they are sent in, 
they are not deducted from the currency in circulation 
until so cancelled. Nevertheless, as greenbacks to the 
same amount are deposited, this feature of the law 
works a certain contraction. 


to appeal to all hard- | 
money men not to delude themselves with the notion 
that the inflation heresy has been killed so dead that it 
is safe to support those who were on that- side of the 
question in the late contest. The advocates of soft 
money will continue the agitation as long as they can 
persuade anybody that they, and they alone, are the 
friends of the people, and we must remember that the 
race of idiots never dies out. If it should happen that 
a majority of Congressmen favorable to inflation should 
be returned, even though the currency question were 
not made a leading issue in the canvass, and even by 
the consent and support of hard-money men, who 
think the controversy closed by the veto, it would be 
claimed and exulted over as “a victory for expansion.” 
We believe the people are really opposed to inflation. 
If so, let it be known. There are enough good men in 
both parties who would confer honor on their constitu¬ 
ents and do excellent service at Washington, without 
taking any of the supporters of a discredited and most 
unwise policy. 

The constitutional election in Ohio being over, the 
party conventions will soon be held. There is to be a 
great struggle over the two currency theories, unless 
a peace is patched up by the adoption of resolutions 
which both sides can support if they try hard. The 
interest in the constitution, which, however, did not 
manifest itself at the polls, has, for the time being, 
overshadowed the party contest. Ohio Democrats 
cannot afford to quarrel, as can their brethren in Illi¬ 
nois, because in the former State they have a good 
chance to carry the election, while in the latter 
appear to have none, even if they were united. 


they 


TWO WESTERN VOICES. 


A Voice from tlie Germans. 


The latest intelligence of the Illinois democratic sit¬ 
uation is contradictory, and no trustworthy basis is 
given for forming an opinion as to the prospects of the 
two conventions. There is certainly a real split in the 
party, and the division is near enough to the center to 
make the rivalry between the two factions very interest¬ 
ing. A majority of the papers we have seen favor the 
independent hard-money convention, but there are 
some notable exceptions. In certain sections of the State 
it is represented that very few Democrats give their 
countenance to the newest departure; elsewhere public 
opinion is strong for the consolidation of an earnest "op¬ 
position party, having distinct and honest principles. At 
the East it may be said, with confidence, that there are 
few or no supporters of the Bourbon wing of the Illinois 
democracy. 


As congressional nominations are now making in 


The Union , a Chicago newspaper printed in the Ger¬ 
man language, had an English article on “Democratic 
prospects,” not long ago. 

Having held out a certain amount of encouragement 
to the “democracy,” upon condition of their making 
their fight for principles and not for the spoils of office, 
the Union proceeds to give the gentlemen of the com¬ 
mittee to understand what must not be done, and also 
what must be done, in order to secure even a chance 
of success. In the first place, there must be no “sac¬ 
rifice of principle in favor of supposed expediency, nor 
must there be any toadying to popular prejudices " 
Which seems to mean that there must be no unprinci¬ 
pled platform-building for the sole purpose of catchin 
votes and getting offices. In the second place, mere 
negative virtue will not suffice. There must be affirm¬ 
ative virtue as well. “The democracy had better be¬ 
lieve that ambiguous phrases and sloppy ‘flapdoo¬ 
dle’ will no more assure its success than outspoken 
rascality or unmitigated stupidity of the Hendricks 
Voorhees persuasion.” And further to the same effect: 
“This is a time of pressing necessities and practical 
issues. The national credit must be maintained, the 
material welfare of the country secured, and the indi¬ 
vidual liberty of American citizens protected. If the 
democracy is willing to further those purposes in an 
outspoken, unequivocal way, and to appeal for sup¬ 
port to all men who oppose the shinplaster deluge, re 
pudiation, and paternalism, it will succeed; otherwise 
it won’t.” 

In case the democratic party will come up to this 
standard of political morality and economic sound¬ 
ness, it can confidently expect the hearty co-operation 
of German Americans. These men have no axes to 
grind in the coming contest, but they have certain 
well-defined political and economic principles, by 
which they propose to stand, come victory, or come 
defeat. Their platform is short: 

“1. Hard money, sans phrase. 

“2. A tariff for revenue only. 

“3. Payment of national debts in honest money. 

“4. Individual liberty.” 

These are the essential planks. Beyond them, ex- 


Anotber Voice from tlie Grangers. 

Mr. Willard C. Flagg, President of the Illinois State 
Farmers’ Aosociation, spoke thus at a Grangers’ meet¬ 
ing, at Walnut Grove, early in August: 

FROM MR. FLAGG’S SFEECH. 

Political Economy has never received either due at¬ 
tention or proper respect from politicians or people. 

A flippant talker, without convictions, gets up and 
panders to whatever your prejudices or mine may dic¬ 
tate, and we do not inform ourselves sufficiently to de¬ 
tect the insincerity and shallowness of the man. He 
will ridicule the scholar who has made the subject a 
study as an impractical man, and you and I applaud 
the idea. He does the same thing as if he sneered at 
one of you, who have been engaged in farming all 
your lives, as knowing nothing about farming. Now 
this is a state of things we must get out of. Our stump 
speakers know little more, and often a good deal less, 
of political economy than we do, and are the blind 
leading the blind. We must take up these grave 
questions of political economy and study them for 
ourselves, or the legislation of the country will be, as 
heretofore, shaped contrary to our interests and we be 
ignorant of the fact. This discussion is one of the 
great advantages of the farmers’ movement, and I 
hope, whatever else its results may be, it will leave 
us a more intelligent and less tractable class—men who 
will do their own thinking,-adopt their own theories of 
right government and enforce them fairly and honor¬ 
ably at the polls. 

It is clear to my mind that the money of every 
country should be issued by its Government. Our 
National Government expressly has the power to coin 
money, and, unfortunately, the power to issue cur¬ 
rency notes. No credit money can be issued in which 
the masses of the people throughout the country will 
have the same confidence as in these Treasury Notes, 
and so far as they are required by the business of the 
country they reduce the interest bearing debt of the 
nation. The nation, as a tax-paying community, 
gets the benefit of this saving of interest. But this 
state of things was not permitted to last. This inter¬ 
est was assigned in part, and it is even sought to give 
it entirely, to the National Banks of the country for 
private profit. And now it is said by Mr. Spinner, 
“The banks are strong enough to rule both the Gov¬ 
ernment and the people.” This credit currency, both 
legal tenders and national bank notes, has been more 
or less depreciated during nearly the entire period of 
its existence. It has fluctuated greatly at times and 
been of unequal value, as irredeemable paper necessarily 
must. This is a state of things unfavorable to all 
legitimate business, and especially injurious to the working 
men of the country—to all who produce articles that are ex¬ 
ported , or buy articles that are imported. But so far 
as we can see the national banks, the gamblers in 
stocks, and even many of those most injured by the 
depreciation, do not desire this money made good by 
a return to specie payments. 

I take it that the best interests of the masses of this 
country require that so far as we have a tariff it 
shall be a tariff for revenue only; that the transporta¬ 
tion of the country shall be regulated and controlled 
not by private avarice, but by the representatives of 
the people in their interest; and that the currency of 
the nation shall be issued for the benefit of the peo¬ 
ple and be maintained at par. We want a good cur¬ 
rency which shall make the money of the United 
States equal in value to that of other countries with which 
we trade; so that the producer may buy and sell on 
equal terms. We want this currency, so far as it is 
not gold and silver, Treasury Notes and not National 
Bank Notes; so that the interest on the issue may 
inure to the people and not to the stockholders of Na¬ 
tional Banks. 


Spirit of the Press. 

[New York Tribune.] 

The Democrats of Illinois appear to us to have a 
tempting opportunity. Let them adopt, without hesi¬ 
tation or reserve, the hard money doctrine proposed 
by their Committee, and they will at least attract to 
their candidates a great number of wavering voters 
who are disgusted with perpetdal tergiversations and 
looking for a bold policy which cannot be misunder¬ 
stood. A great deal of the uncertainty which pre¬ 
vailed two months ago respecting the financial temper 
of the Western States has been dispelled since Con¬ 
gressmen have had opportunities for personal inter¬ 
views with their constituents. Mr. Logan has tem- 


pressions touching “reform in general monopolies, sal- porarily gone under, and Mr. Morton, after his custom, 
ary grabs, civil-rights bills, etc., etc., will be all well has been trying to go backwards, and probably if the 
enough, but by comparison utterly insignificant. | Illinois Republicans could hold their Convention over 





















90 


THE FINANCIAL RECORD. 


again they would make the financial plank in it a great 
deal stronger than it is now. Indications all point 
toward the defeat of the paper-money party, if not at 
this election then certainly at the next. Yet Mr. 
Richardson speaks for a tolerably large body of infla¬ 
tionists who are not strong enough, we hope and be¬ 
lieve, to control the Democratic Convention in a fair 
trial of strength, but formidable enough perhaps to 
frighten politicians away from the frank and honest 
course recommended by the Committee, llis cam¬ 
paign, therefore, will be watched with no little interest, 
and the action of the regular Democratic Convention 
on the 26th of August, will be awaited with considera¬ 
ble anxiety. 

[Lockport (N. Y.) Times.] 

Resumption, with most conventions of both parties, 
is like repentance with old, hardened sinners—some¬ 
thing that they are in favor of, but are unwilling to 
name the time when it shall be accomplished, blow, 
we have no idea that the bondholders believe that the 
Indiana Democracy, or any other considerable body of 
men in this country, are really in favor of a policy 
that will end in repudiation. Resumption is so simple, 
and can be so easily accomplished, that most intelli¬ 
gent men who have studied the subject believe that, 
should the policy of redeeming the live-twenties with 
greenbacks prevail, the very next step of the bond¬ 
holders, who are now running the Government, would 
be to make the greenback as good as gold; and, if 
this cannot be speedily accomplished in any other way, 
let us hurry up the triumph of the greenback policy 
of paying off our bonds. 

[Syracuse Standard.] 

Here is a goose to be picked. A correspondent of 
the Tribune lias discovered that the farmers of Minne¬ 
sota “are becoming creditors instead of debtors; their 
abundant crops and the fair prices have made them 
lenders of money instead of borrowers. Very little if 
any Eastern or foreign capital,” he adds, “is now 
coming here for investment.” There has evidently 
been some great oversight or mistake on the part of 
the speculators and money-lenders in not keeping the 
Minnesota farmers “scooped” clean. As one of the 
results of this prosperous condition, this same corre¬ 
spondent finds that “the strongholds of the inflation¬ 
ists are those parts of the West and South where the 
people are poor and their business is so unprofitable 
that they find themselves deeper and deeper in debt at 
the end of each year.” Where the people are poor 
and growing poorer, notwithstanding they are working 
hard all the time, they naturally look for the cause of 
their suffering and seek a remedy. The people of the 
West and South may be mistaken as to the effects of 
inflation, but this does not lessen their suffering nor 
the need of a remedy. They are craunclied between 
the jaws of an extortionate and insatiate monetary 
system, and attribute their want of money to repre¬ 
sent their capital to the lack of currency in the coun¬ 
try instead of to the devouring system which swallows 
up the currency and makes a clean sweep once in 
every eight or ten years, carrying it all to the great 
money centers. 

[Rollo (Mo.) Enterprise.] 

Our present Congressman, the Hon. R. P. Bland, is 
an inflationist. On this question we are confident he 
does Dot represent his constituents in this district. The 
old Democratic idea of money, was “hard money,” 
and time after time have they denounced our present 
currency system as absurd and the parent of untold 
evils to the country. Now we have the absurd spec¬ 
tacle of candidates for Congress, howling for more of 
this evil, that three or four years ago, according to 
their idea of things, was bringing ruin to this people. 
What is the cause of this ? Do they think that the 
people are fools ? 


The Illinois Political Chowder. 

An Illinois Republican editor says there are now 
Jive political parties in that State,—his own, which he 
believes to be pure and progressive, although it re¬ 
joices in the great Logan; the “Independent Reform” 
party, composed, he says, “one-tenth of farmers, who 
haven’t yet discovered how they are being'made cats- 
paws of, and the rest candidates and sore-head politi¬ 
cians;” the Prohibition party, consisting of a few ex¬ 
cellent men and women who, however, are hurting 
only their friends, and benefiting nobody by their at¬ 
tempt at independent movement; the McCormick par¬ 
ty, “consisting of those Democrats who believe in hard 
money rand free trade, and of Hesing and his ‘fifty 
thousand Germans’ who believe in free whiskey; ” and 
the party of the old Bourbon, paper money Demo¬ 
cracy, “who swear that nobody but genuine hard shell 
Democrats shall vote with them, and only such of 
them as never want to see another gold dollar in the 
country.” This division among the Democrats, the 
Republican editor believes to be very useful to the 
party of which he is a member, and upon that, appar¬ 


ently, he founds his hopes of Republican success in 
November, when the members of Congress are to be 
chosen. 

The first pitched battle between the hard money 
Democrats and their inflation opponents will come at 
the State convention next week in Springfield, where 
851 Democrats and other members of the Illinois op¬ 
position are to gather for the sake of nominating a 
State ticket. The Chicago Times , which is the chief 
organ of the McCormick or hard money movement, 
thus speaks of the declared purpose of Col. W. A. 
Richardson‘and his paper money friends, to attend the 
Springfield convention next Wednesday: 

Old Dick Richardson, Gen. Singleton, Hope Davis, 
W. T. Dowdall, Bill Anderson, Lewis W. Ross, and 
other “war-horses” of the old organized contradiction, 
will have no more right to appear in the opposition 
convention of the 26th instant than they would have 
had to appear in the office-holders’ convention of June 
17; in fact, not so good a right, for their avowed polit¬ 
ical purposes and those declared by the office holders’ 
convention are essentially the same. Their appear¬ 
ance at Springfield to claim participation in the oppo¬ 
sition convention would be a most insolent proceeding, 
discreditable to the character of gentlemen, and in¬ 
sulting to a body of citizens called for distinctly speci¬ 
fied purposes to which these “Democratic war-horses” 
are opposed. 

The Democratic newspaper at Springfield, the Regis¬ 
ter, favors the action of the hard money wing of the 
party, says the call for the McCormick Convention 
is “endorsed by Democrats everywhere,” and reads a 
sharp lecture “to the carpers at the action of the De¬ 
mocratic State Committee in defining the position of 
the Democracy, and inviting others than Democrats to 
participate with them.” 

The Jacksonville Sentinel , another influential Demo¬ 
cratic paper, is on the side of Richardson, and says, 
that the party papers in the State are outspoken 
against the assumption of the Democratic Central 
Committee attempting to dictate a platform to the 
masses who are honestly opposed to the Radical man¬ 
agement of both State and national affairs. “We 
know,” it says, “that many of the members of the 
State Central Committee do not endorse the action of 
the committee, at the late session in Chicago, and will 
do all they can to have the people in State Convention 
make a platform, not a few wire pullers.” 

How strong this paper-money wing of the Dem¬ 
ocrats is, we shall soon see by the result of the Con¬ 
vention; but it is just now so noisy and violent as to 
lead us to think it may be only a minority. Its prin¬ 
ciples may perhaps be gathered from the speeches of 
Richardson and Singleton at Quincy a week or two 
since, from which we make a few extracts. It will 
be noticed that both of them, though really inflation¬ 
ists, do not venture to declare against a return to spe¬ 
cie payments. Col. Richardson, who commanded a 
regiment in the Mexican war, and has been a member 
of Congress, spoke thus of 

THE DEMOCRATIC COMMITTEE. 

It was a self-constituted committee—a committee 
organized for the purpose of making Mr. Storey an 
organ, and nothing else. But let us admit, for the 
sake of argument, that it was a regular committee, 
duly appointed according to the usage of the party, 
what right has that committee to lay down a plat¬ 
form upon which I am to stand ? They have left 
nothing for the Convention to do—not a thing. 
They might just as well have appointed the two candi¬ 
dates and told us. “Now you go to the polls and reg¬ 
ister this.” Bul there was another purpose in view. 
They wanted to capture that committee for the pur¬ 
pose of indorsing the policy of Grant, and these gen¬ 
tlemen had better watch out for fear I will get over in 
the Republican ranks. They are there now. I not 
only object to the mode in which the platform was 
made, but to the platform itself. The first resolution 
in the platform is— 

“1. The restoration of gold and silver as a basis of 
the currency of the country; the speedy resumption 
of specie payments, and the payment of all national 
indebtedness in the money recognized by the civilized 
world.’’’ 

Now, if the object of the resolution is the resump¬ 
tion of specie payments, and nothing else, I am in fa¬ 
vor of it. The Quincy Herald, however, thinks I can 
not be for anything else than inflation. I am neither 
for inflation, as he understands it, nor for contraction. 
I am for paying all our debts—those among the peo¬ 
ple as well as the bondholders. 


HOW TO RESUME SPECIE PAYMENTS. 

Fellow-citizens, there are two means proposed by 
which we shall resume specie payments. One is that 
proposed in his memorandum to Senator Jones, of Ne¬ 
vada. That is to repeal the law making Treasury 
notes a legal tender. Treasury notes are as old as the 
Government itself. I remember during the time that 
I was in Mexico I paid, in the city of Saltillo, one hun¬ 
dred and five dollars for a one hundred dollar United 
States Treasury note. I sent it home, and when I re¬ 
turned, for the first piece of property that I bought in 
Quincy, §100 of those Treasury notes went into its 
first payment. The Republican party made those 
same Treasury notes legal tender, and the Supreme 
Court has decided that they are a legal tender. The 
Court was unanimously of the opinion that they were 
legal tender for all subsequent contracts, but the 
Court decided no upon the question whether contracts 
made prior to that time could be paid in that sort of 
money. Grant, for the purpose of overriding what 
seemed to -be the opinion of the Court at that time 
upon the subject, placed two new Judges on the bench, 
and the Court then decided that the greenbacks are le¬ 
gal tender for all purposes. Well, now Grant wants 
to get to specie payment by repealing that law, so as 
to change the very decision that he procured himself. 
That brings us down to specie payments. That law 
adopted, the city of Quincy to-morrow morning would 
be unable to buy a breakfast for the citizens of this 
place; ruin, disaster, misfortune, everything would 
overspread the land. 

The other plan is this: For the Government of the 
United States to accept her notes for all dues of every 
kind and description; to make the greenback, in other 
words, worth as much as gold and silver. The mo¬ 
ment you do that you bring its value up. Mr. Storey 
doesn’t want that. The Chicago Times is in favor of 
Grant’s proposition; wants to place the Democratic 
party in that position, and that is what that resolution 
means. These men know exactly what they want to 
do. They mean to render this money that is in cir¬ 
culation among the people valueless. 

THE OLD DEMOCRATIC POLICY. 

I fought through the hard money campaigns over 
thirty-four years ago. It never was the policy of the 
Democratic party to have gold and silver and nothing 
else. They made banks and sometimes tolerably bad 
ones. We used to fight our friends, the Whigs, be¬ 
cause they wanted to put all the money in the Bank 
of the United States, and not in the Treasury. The 
Democratic party never made war upon the credit 
and the Treasury-notes of the country. The first part 
is all right enough, but when they come out with that 
tale that we are to make war upon the Government 
credit, destroy the issues of notes that are among the 
people, and transfer them to the bondholders, I say to 
the gentlemen: “No, no, gentlemen, I am not of you 
that must protect that money that is in circulation 
among the people. I want to take care of the bonds, 
to pay them according to the contract ; I want to take 
care of the greenbacks, also, and pay them, too. The 
holders of greenbacks are entitled to as much of our 
protection and legislation as the holders of our bonds. 
1 am not for expansion except in one way, by bringing 
gold and silver in circulation, and adding that to the 
currency of the country instead of making it an arti¬ 
cle of commerce as the Republican party are now do¬ 
ing. I am not for contraction in the line that the Re¬ 
publican party are. They are for protection on this 
line; retire your greenbacks and indebtedness upon 
which you are paying no interest, and increase to that 
extent the interest bearing debt of the country. I say 
retire your bonds while you have any money, and les¬ 
sen your burden that way. 

This is the old Pendleton repudiation theory over 
again, and is, therefore, very naturally endorsed by 
the Cincinnati Enquirer. Gen. Singleton goes far¬ 
ther in the same direction. He said, at Quincy: 

Then we come to the first proposition which that 
Committee submit, and it is the central figure, the 
leading idea of the whole series of propositions that 
we shall have our currency based upon specie: that 
we shall resume specie payments; that we shall pay 
our taxes and the indebtedness of the Government, its 
bonds, in gold. Here are three propositions. They 
look like a single topic, they are so well framed to¬ 
gether, and they are so varnished and veneered that 
you would swear that they were taken from the native 
truths of Democracy. But, gentlemen, the material 
is rotten, the purpose is rotten, and they form togeth¬ 
er a sort of political trinity of the banks, the creditors 
and the bond-holders. We have for years in Illinois 
been considering and discussing this question of cur¬ 
rency. I was one of those who believed that when 
the Government issued its Treasury-notes it did so in 
violation of the Constitution. The Supreme Court 
have, however, settled that question, so far as I am 
concerned. The Supreme Court was the department 
of the great Government of the United States, to 
which this question was submitted by the Constitution. 
They have decided that the greenback is constitution¬ 
al, and, being constitutional, who can say that it has 













THE FINANCIAL RECORD. 


97 


not served the country faithfully and well ? Who is 
not satisfied to receive it for any due, for any property, 
or for any purpose for which money is received ? They 
have proposed to change it. How have they proposed 
to change it ? They have proposed to substitute 
banks; they have proposed to substitute a currency 
based upon' gold and silver. Haven’t we tried a cur¬ 
rency based upon gold and silver from time immemo¬ 
rial ? Hasn’t it failed in every instance in which it 
has been tried? Was there not a time when there 
was not a corporation, incorporated under the laws of 
this or any other State, that did not suspend specie 
payment whenever it was its interest to do so, that did 
not depreciate its own paper, and buy up that paper at 
a ruinous discount to the holder ? Then, if in these 
statements I am correct, we don’t want to return to 
that system of paper currency. 

The issue in Illinois being now fairly made up, and 
the Germans, who are almost all hard-money men, 
having joined in the McCormick movement, we shall 
expect to see the Springfield convention declare for 
that side* in which case, we suppose Richardson and 
his followers, who seem to be mostly in Southern Illi¬ 
nois, will bolt the nominations. So will the McCor¬ 
mick party, in the other alternative, no doubt. 


The Michigan Independents. 

A convention to form a third party in Michigan was 
held at Lansing, August 6. About one hundred del¬ 
egates were present. Eugene Pingle, of Jackson, was 
elected President and J. E. Phelps, of Lenawee; Per¬ 
ry Myro, of Calhoun; Wm. A. Berkey, of Kent, Vice- 
Presidents; J. V. Johnson and Allen Adsit, Secreta¬ 
ries. Speeches were made by Gov. Blair, Senator M. 
D. Wilbur, of Allegan; W. W. Lobdell, of Battle 
Creek, Wm. A. Berkey, of Grand ltapids, H. S. Steb- 
bins, of St. Johns, and others. Among the resolutions 
adopted were the following, one of which relates to 
the currency, and favors sound money, without dis¬ 
tinctly saying so. 

Resolved , That we favor the provision by the govern¬ 
ment of a sound currency that shall not be liable to 
such contraction or inflation as shall result in injury to 
the business interests of the country, not overlooking 
the hope that we may approach a specie basis as speedi¬ 
ly as shall be consistent with the financial prosperity 
of all business pursuits. 

Resolved, That while we are willing to bear any and 
all reasonable and just taxation, the laboring and pro¬ 
ducing classes should be allowed to enjoy the rewards 
of their toil without being subjected to spoliation in 
the form of taxes, and subsidies levied to maintain in 
idleness an unnecessary army of office-holders and 
contractors; that we rejoice in all organizations whose 
tendency is to protect the interests of the producing 
classes, and* welcome their assistance in all efforts to 
purge our government of the rings and combinations 
which are now sapping the foundations of the republic. 

Resolved , That the Legislature has the right to reg¬ 
ulate the fares and freights upon railroads, so far as to 
protect the public against unreasonable charges, and 
it is the duty of the Legislature at once to so change 
the rate and mode of taxing railroads so that they 
shall bear equal burdens with other property in the 
support of the government. 

A State Convention to nominate a ticket for this 
third party to support, is called for the 7th of Septem¬ 
ber. The Democratic State Convention comes Septem¬ 
ber 10th, and it is intimated that the two may agree 
upon the same ticket. 

The National Expenses. 

[From the (N. Y.) Tribune.1 

The expenditures of the Government, classed under 
the.head of Civil and Miscellaneous, have been as 
follows for the last thirteen fiscal years: 


Year 

• ended. 

Amount, 


June 

30, 

1SG2. 


59 

J line 

30, 

1803. 


37 

J ime 

30, 

18G4. 


87 

June 

30, 

1805. 


10 

J line 

30, 

1800. 


17 

J une 

30, 

1807. 


72 

J une 

30, 

1808. 


07 

June 

30, 

1809. 


53 

J une 

30, 

1870. 


50 

J une 

30, 

1871.. 


23 

J line 

30, 

1872. 


42 

J une 

30, 

1873. 


00 

J une 

30, 

1874. 


02 


The enormous rate at which those expenditures 
have increased since 1861 will be seen at once. 

The expenditures of this class for the year 1873 
were inordinately increased by the Salary Steal, and 
by the heavy deficiency bills put through the XLIId 
Congress at its concluding session. While the appro¬ 
priations for deficiences by the third session of the 
XLIId Congress exceeded eleven millions of dollars, 


those of the present Congress have been barely four | 
millions. These facts forbid the hypothesis that there 
has yet been any real retrenchment in the Civil and 
Micellaneous expenditure. 

It is a noteworthy circumstance that the years 
concluding with even numbers, such as 1870, 72, 74, 
&c.-, being those in which Congressmen are elected, 
have of late uniformly shown a slight decrease in total 
expenditure, as compared with the year immediately 
preceding. We should be glad to see the improvement 
protracted into the year following, but who can guar¬ 
antee that such will be the case in 1875 until the 
XLlIId Congress has expired ? 

The item of interest on the Public Debt has fallen 
from $143,781,591.91, paid in 1866—7, to §107,119,815,- 
.21 in 1873—4. The latter sum includes some illegal 
commissions to the old Syndicate paid by Mr. Rich¬ 
ardson. The annual interest charge cannot now ex¬ 
ceed §100,000,000, including that paid on the Pacific 
Railroad bonds. We have always maintained that it 
was sound policy to reduce the debt rapidly. Taxation 
for this purpose, if not excessive —and the progress 
of the country since the war proves that the taxes 
have not impeded its growth—is in the highest degree 
beneficial. In the short space of seven years, over 
forty millions have been cut off from the annual in¬ 
terest account, and we are glad of it. It is the only 
feather in the financial cap. 

intiationist’s Column. 

AN ILLINOIS THEORY. 

[From Gen. Singleton’s (Democratic) speech at Quincy.] 

What does a return to specie payment mean ? 
There is a vast difference my fellow-citizens between 
a return to specie payment (as I will presently show), 
and making the present currency convertible into gold 
at the will of the holder. The idea of a return to spe¬ 
cie payments is this—it is this and nothing else, and 
can be nothing else—that the greenbacks shall be 
withdrawn from the circulation, that paper issued 
from banks—incorporated by the States, not by the 
General Government, which have been required to 
keep such an amount of specie in their vaults—shall 
take the place of these greenbacks, and that gold shall 
constitute the only legal tender in this country. There is 
where the shoe pinches first. To-day we have what is 
equal to nearly eight hundred millions of legal tender 
money in this country. True, the greenbacks don’t 
amount to §800,000,000, but here are these National 
banks that are required to redeem their notes upon pre¬ 
sentation in greenbacks. There is nearly §800,000,000 of 
National bank money, and greenbacks in circulation in 
the United States. This Chicago platform proposes 
that this §800,000,000 of money shall be substituted by 
§200,000,000 of gold, and to pile more upon the debt 
which now lies like an incubus upon the country, 
We are to-day as indebted to the National Banks in 
§900,000,000. Go and examine the records of the 
county of Adams. See how many farms in the county, 
and how many houses in your city are free frcm mort¬ 
gage ? Look at your local indebtedness—your indebt¬ 
edness as a city, as a county, as a government—and 
see whither this proposition will lead which proposes 
that the means of paying off indebtedness shall be re¬ 
duced to one quarter of what you have been accus¬ 
tomed to possess. 

Now, fellow-citizens, I have said to you that there 
was a difference, and a wide difference between the 
resumption of specie payments, and making the pres¬ 
ent greenbacks convertible into gold and silver at the 
pleasure of the holder, without disturbing the business 
of the country. What has kept the greenback below 
par ? Witness the great struggle that has gone on for 
years between the greenback and that idolatrous coin 
called gold. Look at the great banks. Did you ever 
know any paper to withstand the panic as it did ? 
Didn’t it come out of the panic with increased confi¬ 
dence, with an appreciated value, and come out again 
to test the supremacy with gold as a standard of value 
and a medium of exchange. Notwithstanding this 
struggle, or rather in the midst of this struggle, the 
greenback has been loaded with an odious discrimina¬ 
tion on the part of the Government. The Government 
has declared that it is alegal-tender, for all debts, pub¬ 
lic and private, except duties on imports and interest 
on the public debt. I say that the only cause for the 
difference between gold and greenbacks is that the 
Government has discriminated in favor of gold. It 
has created and exaggerated a speculative and unnatu¬ 
ral demand for gold at the expense of greenbacks. It 
has been without a necessity, and the fact is proven by 
the frequent sales which the Government makes of 
gold. Why, can any man answer—will any man give 
a reason—why the Government of the United States 
should collect from you and from me gold and silver, 
and put it in the Treasury to sell at public sale, and 
promote the interests of a ring in New York and a 
ring in Washington to bring down the price of gold 
and put up the price of gold at the pleasure of the Sec¬ 
retary of the Treasury ? But suppose that the Gov¬ 
ernment of the United States to-morrow should declare 
that these greenbacks should be received in payment 
of all dues—I say that they should be received in pay¬ 
ment of all duties to the Government. 


I have not spoken about how the Government debts 
are to be paid, but that they should be receivable for 
all debts due the Government itself what would be the 
result ? The moment that the law was passed green¬ 
backs would unlock the vaults of every safe in New 
York and elsewhere that contain gold and silver. The 
demand would cease. Who has use for it ? We are 
told that the Government has use for it to pay the in¬ 
terest upon the debt and the principal. It is not 
so, and I will prove it to you. Where does the gold 
come from that the Government locks up in its vaults 
and sells at stated intervals ? It comes from those who 
mostly use it; it comes from the foreign producer who imports 
his goods into our market and pays the gold for the privilege 
of selling them here. Then when the interest upon our 
debt is only §150,000,000 it can not be pretended that 
it is necessary that we should collect the gold for that 
purpose alone. We know that the duties for imports 
far exceed that amount. We know that the sales of 
the Government far exceed that sum. Then, the very 
moment the Government says that greenbacks shall be 
received for all duties, where clo they go ? They can be 
found in every country with which we have a commerce; to every 
country to which onr gold formerly went the greenbacks will 
go, because the country can use that greenback in paying its 
duties, and the amount of duties it has to pay is a great deal 
more than the amount of interest which we have to pay to 
them, and they are the gainers by this making of the green¬ 
back a tender for all Government dues. But suppose it 
were otherwise, and the demand of the Government 
was simply confined to that amount sufficient to pay its 
interest. The demand would be so trifling that it 
wouldn’t make a ripple upon the surface. Greenbacks 
would be at a premium instead of gold, for, I tell you 
—and you old men who have had experience in this 
country when we had gold and silver and the United 
States bank notes, know what a luxury it was to have a 
good, sound paper money, that you could put in your pocket 
and be conscious that wherever you go it is a passport to all 
the luxuries and comforts of the country you visit or inhabit. 


Specie Payments anil tlie New Currency 

Law. 

[From the New York Financial Chronicle.] 

We have received several communications on re¬ 
sumption. One gentleman argues that we shall never 
be able to resume until for a long consecutive period, 
the foreign exchanges shall continue favorable. In sup¬ 
port of his views he points to the example of the Bank 
of France, contending that the cause which has kept 
her notes at par is not the restriction of issues but the 
favorable exchanges. This argument is the more 
plausible, as France has been importing more gold than 
her exports for several years past. Another declares 
that we shall not be able to resume without contraction. 
He refers to our recent absorption of greenbacks into 
the treasury under the five per cent, provision of the 
new law. Here he says is a contraction of seventeen 
millions of legal tenders, deposited in the treasury as 
security for national bank circulation. The sum is 
withdrawn from the active currency which is by so 
much contracted. And yet we see no stringency, no 
monetary trouble, no disturbance of the loan market. 
On this he argues that contraction with a view to specie 
payments may be effected without the mischievous re¬ 
sults which the inflationists predict. A third commu¬ 
nication from an old bank officer says the exchanges 
are turning in our favor, gold is tending downward, 
and if the movement were to go on we might before 
long expect to resume. What he doubts is, whether 
we could continue or keep up our resumption after we 
had achieved it, and whether the exchanges would not 
forthwith become adverse and be turned against us by 
the very fact of our resumption. It is easy to see that 
this objection has a certain force, and that suspension 
protects the reserves of the banks. But this protection 
would cost too dearly if it induced us to lengthen more 
than is absolutely needful the suspension of specie 
payments. 

One of the most interesting communications we have 
had on the subject of specie payments contends that 
by the recent finance bill, Congress has done more to 
help resumption than by any legislation enacted since 
the war. If this be so, the inflationists who had so 
much to do with the bill have sadly missed their aim. 
The chief help which the new law is expected to give 
to resumption, according to this writer, is to come in 
three ways: first, it will control and render mobile and 
elastic the bank currency which formerly was as in¬ 
elastic and rigid as the greenbacks themselves. Second¬ 
ly, it is claimed for this new law that it will by degrees 
limit and narrow the bank note issues, and curtail them 
within much less ample proportions than they have at 
present. Thirdly, this work, it is said, will be done in 
a slow, safe, conservative manner, so as to help rather 
than hinder the legitimate growth of agricultural, 
manufacturing and commercial enterprise throughout 
the West and the South. From the beginning we have 
contended that the bill, in its present shape, was free 
from the mischievous powers which the inflationists 
ascribed to it. But few persons, we imagine, are pre¬ 
pared as yet to take so sanguine a view as our corre¬ 
spondent of its wholesome operation, j 


























^rnman .^ssurntton, 

5 Pemberton Square, Room £1. 

Boston, August 21, 1874. 

The sixth number of the Journal of Social Science has been published by Hurd & Houghton, 13 Astor Place, New York, and may be obtained of 
all booksellers, or by addressing the undersigned. It contains the proceedings of the New York meeting of the American Social Science Associa¬ 
tion and a part of the papers and debates there in May last. Among these are the Address of the President, by George William Curtis; The 
Work of Social Science in the United States, by F. B. Sanborn; Financial Administration, by G. Bradford; Duty of States toward their Insane Poor, by 
Dr. John B. Chapin; The Settlement Laws of Massachusetts, by Edward W. Rice; Pauperism in the City of New York, by C. L. Brace; A Discussion 
on Pauperism; Conference of Boards of Public Charities; The Farmers' Movement in the Western States, by Willard C. Flagg; Rational Principles of Tax¬ 
ation, by David A. Wells; American Railroads, by Gardiner G. Hubbard; Reformation of Prisoners, by Z. R. Brockway; Sir Walter Crofton's 
Recommendation of the Irish Convict System; The Protection of Animals, by George T. Angell; and American Finance, by Prof. W. G. Sumner. • 

The seventh number, now in press, to be issued about September 20, will contain the rest of the papers read at New York, including one by Rev. 
Dr. Woolsey, of New Haven, on The Exemption from Capture of Private Property upon the Sea; one by President White, of Cornell, on The Relation 

of National and State Governments to Advanced Education; one by William W. Greenough, of Boston, on Public Libraries; and one by Cephas 
« 

Brainerd, of New York, on The Social Science Work of the Young Men's Christian Association. There will also be printed in this number the proceed¬ 
ings of a Conference of Boards of Health, including papers and remarks, by Drs. Bowditch and Jarvis, of Massachusetts; Drs. Harris and 
Smith, and Prof. Chandler, of New York; Dr. Baker, of Michigan, etc. These will be followed by general papers upon Sanitary subjects; on 
School Hygiene, byDn. D. F. Lincoln, of Boston; by Dr. J. Foster Jenkins, on Tent Hospitals; byDa. Alfred L. Carroll, of New York, on 

Sanitary Science in Schools and Colleges; by Dr. Henry A. Martin, of Boston, on Animal Vaccination, etc. 

The paper by President White is the same lately read at Detroit, and will be here first printed in full, along with the remarks of Dr. McCosh, of 
Princeton, and Dr. Tullock, of Scotland, and President White’s reply to Dr. McCosh. As the edition of No. VII will be small, persons other than 
Members of the Association, desiring copies, are requested to subscribe for them in advance. The price for each number is $1.00, and subscriptions , 

may be sent to „ . itilMl F. B. SANBORN, 

Secretary of the American Social Science Association. 


FINANCIAL RECORD. 

“WE NEED ONE THING BESIDES MORE MONEY, AND THAT IS BETTER MONEY .”—Senator Zach. Chandler. 


VOL. I. 


Tlie Financial Record will be continued until further no¬ 
tice, and will be sent free of postage, to all persons who will re¬ 
mit 50 cents to the publishers. All editors who receive it are 
invited to send their papers in exchange. It will no longer be 
published by the American Social Science Association, 
but for the present, as heretofore, communications respecting 
it may be addressed to the Secretary of the Association, F. B. 
Sanborn, No. 5 Pemberton Square, (Room 21,) Boston; and all 
exchange papers, public documents, etc., may be forwarded to 
the same address. 


To Our Readers. 

The above notice means that we shall send the Record to 
all who are willing to read and circulate it, and shall not send 
in any bill for it afterwards. All who choose to send us 50 cts. 
for the paper may do so, and we shall be glad to receive their 
contributions, but none need fear that he will be called upon 
to pay for the paper unless he chooses,—our object being to 
disseminate information on the currency question, and the po¬ 
litical issues involved therewith, and not to make money by 
publishing the Record. Furthermore, we intend to pay, and 
do pay, except perhaps here and there, by inadvertence, our 
postage in advance, as the law requires, so that any claim made 
for postage at the office of delivery to the subscriber is presum¬ 
ably unfounded. These explanations are given because some 
of our readers seem to have misunderstood the financial aim 
of the Record, which is not to take good money out of the 
pockets of the people against their will, but to put better mon¬ 
ey in them whether they will or not. But if there are any dis¬ 
ciples of Butler, Logan or Singleton, who prefer paper money 
to gold and silver, we will pay them greenbacks, dollar for dol¬ 
lar, in return for all the “idolatrous coins” they will send us, 
and will also pay the expressage on all gold and silver forward¬ 
ed for redemption in “sound paper.” 


Financial Events and Possibilities, 

Our readers will find this week in our columns sev¬ 
eral selections from journals in various parts of the 
country on the prospect for business in the coming 
autumn and winter. Different views are here present¬ 
ed, but the general opinion seems to be that business 
without being very active, will be safe, and sufficient 
to keep the country out of financial embarrassment. 
Prices are tending downward, which of itself is an 
indication that Senator Morton’s “monster of contrac¬ 
tion” is not so dead as his monster of inflation, which 
Gen. Grant annihilated with a veto. The good sense 
of the country has pronounced against any more irre¬ 
deemable, or even unredeemed paper-money, and, 
whatever this Congress or the next may do, inflation 
is no longer an open question. Besumption is now 
the thing to be considered; and it is pleasant to note 
that a ranting rag-money newspaper like the Jackson¬ 
ville Sentinel, from which we copy in the Inflationist’s 
Column, now spends its ingenuity in showing what 
the best way to resume specie payments is, or may be. 

And yet we must not be too much encouraged by 
these favorable symptoms. It is very common nowa¬ 
days for writers in the political newspapers to point 
to a reviving business (if it only would revive), as a 
certain solution of the currency question. Such wri¬ 
ters allow their hopes to blind their judgment in 
more ways than one. In the first place the indications 
of an active trade in the near future are by no means 
so obvious as some claim. Here and there, and in a few 
special lines of business, the activity is a fair aver¬ 
age, but in general, trade is not yet by any means sat¬ 
isfactory; and even if it were much better, the result 
would not be what it is claimed by these optimists. 
We enjoyed uninterrupted good trade for several years 
up to last September, without averting the calamities 
of a commercial panic, caused by a bad currency. A 
rapid movement of the wheels of commerce, does 
make the use of money so much more valuable that 
there is an effect similar to that of contraction. But, 
on t-lie other hand, the vicious currency system com¬ 
pels us to conduct all our business transactions at a 
disadvantage, deprives us of the profits on our pur¬ 
chases and sales abroad, and both drains us of what 
little hard money we have, and renders us less able to 


FRIDAY, AUGUST 28, 1874. 


f recover it when we may need it. The appa rent pros¬ 
perity may not be of a character to prepare us now, 
or at any future time, for a return to the only sound 
basis of business. For that something else than busi¬ 
ness activity is needed. 

The symptoms of stringency in the money mar¬ 
ket noticed last week have been more apparent this 
week. The latest New York bank statement shows a 
still larger decrease of reserve, the greater part of 
which decrease, as before, is in specie. It is not to 
be expected that there will be more than a very tem¬ 
porary reversal of this movement until after crop-mov¬ 
ing has been completed; though crop-moving is not 
chargeable with any part of the present tendency. 
There are, however, good reasons to anticipate that 
there will not be so tight a money market this fall as 
is sometimes known at this season. Chief among these 
reasons is the absence of the usual supply of new en¬ 
terprises requiring large amounts of capital. It is al¬ 
ways to be remembered that the country constantly 
grows in real wealth, even in the midst of a panic. 
We have been growing the past year, and there is 
surplus wealth to be invested. Also there is a larger 
supply of money, or what passes for such. As there 
are few new railroads and few new factories, as well as 
few speculative enterprises—(which are not now very 
popular)—the employment of money is likely to be 
less than usual even with the same amount of legiti¬ 
mate business. 

The statistics of the week present nothing new. The 
internal revenue receipts keep up well, and, in spite of 
a despatch from Washington, are larger than last year. 
The national bank notes offered for redemption last 
week were still less in the aggregate, than the previ¬ 
ous week. The machinery of redemption is not ap¬ 
parently in good working order, for during the latter 
part of last week, only about one million out of fifteen 
had been assorted and made ready to send back to the 
issuing banks. Concerning this matter of redemption 
we print elsewhere some interesting statements. 

Pauics au<l their Result. 

A correspondent of the (N. Y.) Tribune, has this to 
say about last year’s panic, and this year’s business: 

A panic seems to be the natural sequel to several 
consecutive years of good business. During brisk 
trade with fair profits, men get into a habit of trusting 
each other, and soon of reposing confidence in un¬ 
worthy persons, as the desire to sell and realize over¬ 
powers the judgment. Everybody is making money; 
therefore everybody can pay his debts. Seilers, in¬ 
stead of refusing to sell this customer, charge him “a 
little more to pay for the extra risk,” without consid¬ 
ering that “the little more” will ruin the customer and 
bring the loss home. All kinds of new enterprises are 
entered into to “salt down” surplus profits. The pros¬ 
pect of great gain brings hoarded money into active 
use. Credit makes a little money do much work; 
money, indeed, being used to settle a very small pro¬ 
portion of business transactions. Several men, keep¬ 
ing accounts in banks of discount, may all obtain 
enough ready money to enable them to carry, for 
many months, large blocks of merchandise or real es¬ 
tate, for which there is .no sale, by accommodating 
each other with their signatures. A may get B’s note 
discounted, B get C’s, C getD’s, and D get A’s. Each 
note maturing a week or two later than the preceding, 
it is only necessary for A, B, C and D to keep enough 
money among them to meet one of the four notes, for 
as soon as one is paid, the process begins again. 

In good times, bank expansion is very great, and, 
of course, prices goon advancing until somebody, who 
has been extremely reckless, finds it impossible to 
meet his engagements. Then conies a desire to test 
prices and the foundations of credit. It is soon dis¬ 
covered that there is not money enough to go around. 
The man who gave his note for $10,DUO can scarcely 
obtain the amount at all, for every one else is trying to 
hold sufficient funds to meet his own notes. Discounts 
are only to be had with great difficulty. For bor¬ 
rowed money, securities have to be given for double 
the amount, and those persons who cannot give them 


NO. 30. 


must go under. Of course, in a panic, there is always 
excessive fright, but this soon passes aw r ay and then 
there is a settling to the conviction that credit has en¬ 
abled business and prices to exceed their proper 
bounds, and also that economy should be the rule. 
The natural recovery from a great crisis we believe to 
be very slow. In 1838, business seemed to have re¬ 
vived; the bank of the United States considered the 
troubles to be over, and became involved in cotton 
speculations. In 1839, the price of cotton was 16 
cents; but in 1840 was 12 cents; in 1841, 11 cents; in 
1842, 9 cents; in 1843, 8 cents. The price did not 
again reach 12 cents until 1847. The bank failed in 
October, 1839, and was followed by nearly all the 
banks in the South and West. The year 1843, was a 
very gloomy one, and the general revival of business 
did not happen until 1844. 

What shall we say of the probable duration of our 
dull trade ? A good harvest is expected, but the first 
effect of it must be a decline of prices of breadstuffs, 
and possible failures of dealers in them. The great 
English harvests of 1813 and 1814 precipitated a finan¬ 
cial revulsion. While all agree that good crops are 
national blessings, yet their first effects are sometimes 
disastrous. There, too, is a prevalent idea that banks 
are rediscounting; that is, are carrying along their 
customers to enable them to wade out of their difficul¬ 
ties. The whole country is trying to practice econo¬ 
my ; but everybody miderstands the hardness of the 
task, and that it takes time for a person or a nation to 
get out of extravagant habits. Of course, economy 
means future prosperity, but does it not also mean 
present dullness of trade ? While the fall business 
should be somewhat better than that of the present 
summer, yet we cannot help feeling that a large busi¬ 
ness is not to be expected. Our money is an uncer¬ 
tain standard of value, and there is a well-founded 
dread of the next Congress and its probable tinkering 
with the currency. We cannot see far enough into the 
future to enter upon ventures that take time for ma¬ 
turity. Perhaps we are really tending toward specie 
payments. If this be so, we should anticipate a fur¬ 
ther decline of prices, or at least no advance from the 
present low ones. Until we reach specie payments, or 
definitely agree that there shall be no attempt to reach 
them, we may hope for a little improvement in trade, 
but need not anticipate the volume of business that 
preceded the panic of ’73. 


Spirit of tlie Press. 

[Chicago Times.] 

With the adjournment of Congress, the mouths of 
the professional inflationists closed completely. Two 
months ago, Western America, through no fault of its 
own, was the laughing-stock of the financial world. 
A handful of crazed politicians had created a belief 
that the Northwest, and a major slice of the South, 
were stupidly solidified in demanding an increase of 
paper money. Where now, Morton, are your gibes at 
“the golden calf;” your flashes of merriment at “the 
blind idolatry of specie,” which were wont to set East¬ 
ern and foreign bankers in a roar ? Where, Logan, 
are your elephantine sallies at the men who “read 
books” and learn financial history from tlie records of 
the past, instead of their own “practical intuitions ?” 
And the misguided many who trailed, some noiselessly, 
some with dumb fidelity, in your wake? “Silent as 
the moon when she deserts the night” are Ferry, Mer- 
rimon, Carpenter, Flanagan, Cameron, and Oglesby 
on “the immediate necessity of giving people money 
enough to revive the general prosperity.” Even Og¬ 
lesby is growing suspicious that Logan made a bigger 
fool of him than the Almighty ever would have al¬ 
lowed our Dick to make of himself. As Windom, and 
a host of uneasy fellow-repudiationists admit, the ad¬ 
vocacy of paper-expansion was the most singular error 
into which a majority of Congress has stumbled since 
the Missouri compromise blunder. 

[St. Louis Republican.] 

Some curiosity is felt about the treatment of the 
money question by the two State Conventions that are 
to assemble at Jefferson City on the 26th inst. and the 
2d prox. It is the question of questions in the States 
east of us, and cannot easily be dodged in our State 
by parties that aspire to the control of affairs. It has 
low) been the accepted practice for the leading United States 
Senator of a State to indicate, if not to dictate , his party's 
State platform. But here comes in a difficulty. The lead¬ 
ing United States Senator from Missouri—we mean the 
one who represents the governing party in the State— 
is Mr. Bogy, and Mr. Bogy is a high-tariff man and an 
inflationist. If the Missouri Democrats maintain the 
* adamantine nature of their fathers of the last genera- 




























00 


TILE FINANCIAL RECORD. 


tion, they are neither; they can not be anything else 
than free traders and hard-money men. In the money 
debate at the last session of Congress Senator Bogy 
followed in the track of Senator Morton and supported 
his inflation bills, leaving to Schurz the duty of avow¬ 
ing the old-fashioned Democratic doctrine of hard 
money. An effort will be made, we presume, to in¬ 
duce the Convention to indorse Mr. Bogy’s (and Sena¬ 
tor Morton’s) votes and speeches on the side of infla¬ 
tion. Wheth.er the Convention will do this or not we 
cannot predict; the chances are in favor of it. 

[Milwaukee News, (Democratic).] 

We are soiry to learn from our Missouri exchanges 
that in all probability the Convention of both parties 
to be held in that State will endorse Senator Bogy’s 
course in advocating inflation, on the side of Morton, 
Logan & Co. Senator Schurz ably advocated the op¬ 
posite doctrine, and we are grieved to admit the con¬ 
viction that lie will not be sustained by his constit¬ 
uents. 

[Independence(Kan.) Democrat ] 

In the start the farmers’ movement was a revolt 
against the rule of the politician, the caucus and part}'. 
Already, however, we see little knots of wire pullers 
wielding the machinery of the new organization to 
promote their own aggrandizement. The caucus as¬ 
sumes the right to decide everything, and the very 
worst.class of professional politicians are busy and 
active. In Iowa and Michigan the new party pro¬ 
nounces for a currency with a specie basis; elsewhere 
they declare for paper without limit. In our own state 
the cry of economy and reduction of salaries has died 
away; the revolt against the manipulations of the 
politicians has spent its force, and we hear nothing 
but a demand for paper money without a basis. No 
party which so utterly fails to comprehend the real 
questions of the hour can attain to power. 

[Wilmington (Del.) Every Evening.] 

If everybody believes times are to be bad, and tells 
his neighbor so, you may depend upon it that no one 
is going to buy anything he can help, and trade will 
languish. Let merchants pluck up heart and act as 
though they expected business and they will not have 
their expectations entirely disappointed. In New York 
the early autumn trade has already set in, and large 
numbers of Western and Southwestern jobbers are in 
the city making purchases, while the same is true of 
Philadelphia and Baltimore. Of course, this indicates 
a revival of the retail trade West and Southwest, and 
the same causes which bring about that result there 
are likewise operative here. Let our merchants pre¬ 
pare for fall trade and tell the people they are pre¬ 
pared. 

[Boston Advertiser.] 

The “prospect” for an active business this fall is as 
good as ever, but business itself seems to be about as 
quiet as need be. Money is plenty and cheap, but 
there are comparatively few borrowers except those 
who have to raise money to meet their obligations. 
As yet there seems to be but little disposition to dis¬ 
count the future, or to borrow money for enterprises 
which must depend upon the future for their success. 
The sluggish way in which consumers take hold seems 
to induce caution on the part of the jobbers, and but for 
the fact that almost everybody has confidence in an ear¬ 
ly improvement,business would be set down as not only 
depressed but discouraging. But business men have 
learned to wait patiently, and will continue to do so 
until the arrival of “the good time” which is surely 
coming sooner or later. 

[New York Times.] 

A general cause operating to produce increase and 
activity of trade is the general plentifulness of money 
at the money centers of the world. Money, or what 
we use as such, is abundant here. It is not the money 
of other commercial countries, and its abundance is 
not due to exactly the same causes which operate else¬ 
where. But in its effect in fostering trade, it is at 
present precisely the same as gold in London. It rep¬ 
resents idle capital gathered from all parts of tire coun¬ 
try, the accumulation resulting from the liquidation of 
debt and demanding use. The money lying idle 
abroad is also an accumulation due to stagnant trade, 
to temporary distrust in current investments, and to 
the unexpended savings of along period of high-priced 
labor. Cheap money incites to new ventures. Those 
who wish to make them and have not the means, can 
get it more readily. Those who have the money will 
lend it freely, rather than lose the interest of it. The 
accumulation has now gone on so long that it is, in a 
sense, becoming oppressive, and the only relief possi¬ 
ble is in the renewal ‘of trade. Such renewal, 
therefore, within reasonable limits, seems not only 
probable, but in the absence of some extraordinary 
cause, certain. 

[Spartansbnrg (S. C.) New Era.] 

The cotton crop, which it was feared about planting 
time would be short, now promises to be the largest 
that has been gathered since the war. Of course this 
crop is not out of all danger, but the present prospect 
is good. • The stocks of cotton goods are light, and 
when the demand from consumers springs up, as it 
must, factories that have been half or wholly idle will 
be set in full motion, so that with an increased crop of 
cotton remunerative prices may be expected. With 
good crops and good prices, nothing can occur to pre¬ 


vent a revival of business. Money, which has been 
scarce in the country, will be in a good supply as soon 
as the crops move. This will give farmers and mer¬ 
chants something else to think about than hard times 
and a scarcity* of currency, and it will also give full 
employment to railroads and steamboats. 

[N. Y. Economist.] 

This is only the third week in August, and there still 
remains seven or eight weeks for the activity which 
has just commenced so auspiciously to develop itself. 
The trade will probably be fully and fairly distributed, 
and while the volume may be expected to reach a full 
average, if not exceed it, there will be little or no ex¬ 
citement. So far it is encouraging to know that re¬ 
mittances come in freely from the country, and there 
are absolutely no complaints on that ground. The re¬ 
cent failure of several firms was merely the consumma¬ 
tion of events which originated in the panic a year 
ago, and produced no excitement in the trade, beyond 
feelings of regret. So far our remarks apply chiefly 
to tlie dry goods trade, but they will apply wftli more 
or less force to the general business of the city. There 
is an evident improvement in most branches of trade, 
and a hopeful feeling as to the future. It is useless to 
conceal the fact that employment continues scarce, 
and business is far from being remunerative. But the 
situation is full of promise. 

[N. Y. Financial Chronicle.] 

Turning now to the future, there is little to discour¬ 
age and much to animate this financial confidence. 
The last monetary Legislation of Congress, now that 
it is better understood, does not seem likdy to disturb 
the financial movements of the country. Our people 
are beginning to regard the new law as likely rather 
to act with a subtle slow influence, the results of which 
may take years for its development. No further Legis¬ 
lation is looked for on tlie banking and financial ques 
tion during the next session; so that there are now 
but few apprehensions such as have been so often 
awakened in the past by threatened Legislation ad¬ 
verse to financial stability. On this view of the facts 
one or two things seem tolerably certain with regard 
to the future. First, we shall have an easier and a 
more tranquil money market throughout the rest of 
the year than has been usual with us for many years 
past. Next, tlie course of business, if less buoyant 
than some persons have conjectured, will at least be 
free from those spasms with which the money market 
has disturbed it. And, finally, a more conservative 
caution will control the banking and financial opera¬ 
tions of the country. There are, also, analogous 
chances establishing themselves among our mercantile 
men in regard to keeping their capital in their legiti¬ 
mate business instead of taking out part of it for peril¬ 
ous risks and speculative ventures, as some of them 
have been tempted to do during the demoralizing era 
of paper-money inflation. 


Perils of Cheap ]>Ioiiey. 

The sixth number of the Journal of Social Science 
which is advertised on our fourth page, contains a 
paper on “American Finance,” by Prof. Sumner, of 
Yale College, (the author of “A History of American 
Currency,”) from which we quote this pithy passage: 

History furnishes us hundreds of illustrations of 
every evil to which a disordered currency gives rise. 
The decline of national and mercantile credit, the de¬ 
terioration of public morals, the contempt for patient 
industry as compared w'ith smartness, the increase of 
the class of “middle men,” the love of meretricious 
display, are old and familiar features in every period 
of fictitious and inflated currency. The money people 
use educates them as much as all the pulpits, schools, 
and newspapers. Its influence is the more deep, be¬ 
cause it is more insidious and unobserved. These are 
its moral and social effects, which to this Association 
must always be of the highest importance; but its 
financial effects are no less disastrous. It belongs to 
the operation of the system that there should be sud¬ 
den, inexplicable crises, erratic developments, heats 
and chills in the financial history of the country. We 
can expect nothing but a series of them so long as the 
system lasts. Primarily it* must press most severely 
on the innocent and helpless, but it promises no securi¬ 
ty to those who for a time profit by it most. A com¬ 
munity in which one half preys upon the other, cannot 
prosper. 

This brings me also to speak of one of the wider 
social aspects of this subject which demands especially 
the attention of our Association, and that is, its bear¬ 
ing upon the socialistic doctrines which have, during 
the last ten years, acquired more and more definite 
expression amongst us, and which I think every care¬ 
ful observer must believe to be gaining strength. Espe¬ 
cially in a period of industrial stagnation, and at a time 
when the expansion of credit has drawn a great major¬ 
ity of the population into the debtor relation, such 
doctrines gain power. It is true that socialistic doc¬ 
trines do not take on the same form here as in the 
nations of the European continent. Bed Kepublican- 
ism cannot flourish in a republic. A distribution of 
property will not find supporters in a country where 
property is widely distributed. But it belongs to our 


science to recognize principles undgr their variou 
manifestations, which vary with time and place. A 
distribution of propeiTv is not a practicable thing. It 
has often been urged that if an equal distribution were 
made the equality would not remain for an hour; but 
it is impossible to conceive of any practical means by 
which an equal division could be accomplished. 

There are only two means by which the distribution 
of property can be regulated otherwise than by the 
laws of value and exchange, and those are gift and 
robbery. Leaving gift aside as narrow in its range, 
personal in its operation, and unimportant in the scien¬ 
tific point of view, robbery is a form of transfer which 
it is the province of regulated society to reduce to a 
minimum. Theie remains only one form of it yet in 
legal operation in some civilized States, and that is 
legal tender paper money. This is an engine by which 
the aims of so sialism may be accomplished under the 
forms of law and to a more complete degree than by 
any other means yet devised. Ti ere seems great rea¬ 
son to fear that its power in this direction is becoming 
better appreciated, and that it may be advocated dis¬ 
tinctly on account of its effect in this direction. The 
opposition of those who resist it on this account is 
often summarily disposed of as selfishness, the liard- 
heartedness of creditors, the “money power,” the op¬ 
pression of capital, etc., but it is a very much simpler 
thing than any of them. It is nothing but the vulgar 
disinclination of the man who has earned something 
to having it taken away from him. The student of 
political economy and social science takes a wider view 
of the matter and insists that such a policy must bring 
ruin on the community. If this policy prevails here 
it will arrest the industrial development of the country 
for a quarter of a century, as it is certain that the 
same policy adopted on this continent in the last cen¬ 
tury places us now far behind where we ought to be. 
If the people of this country divide upon this issue by 
classes, those who have against those who have not, 
it will precipitate a social war, and if they divide upon 
it by geographical divisions, it will bring results to the 
political system of the country which will be disas¬ 
trous. 


Tlie Currency Taw and the Banks. 

During the past week Treasurer Spinner has made 
a call upon the banks by which the notes assorted for 
redemption have been issued, to deposit with him an 
equal amount of legal tenders to make good the five 
per cent, deposit for redemption of circulation required 
by the act of June 20, 1874. This call embraces banks 
in Boston, New York, Philadelphia and Providence. 
It is thought that the call will produce but little effect. 
The redeemed notes of other banks throughout the 
country are being prepared as rapidly as possible in 
the same manner, and a similar call will soon be made 
upon them. These calls do not embrace the whole 
amount redeemed for the several banks, but only that 
part of the redemption which has been assorted. The 
law requires the Treasurer to call upon the banks for 
legal tenders whenever the redemption of their notes 
amount to §500, but it has been found impossible 
exactly to comply with this. The great amount of 
work suddenly thrown upon the redemption agency, 
and the inability of the Treasurer to obtain at once 
experienced counters and assorters, and proper rooms 
and furniture, has caused the assortment to fall much 
behind the redemption, so that the Treasurer is unable 
to call upon the banks for the full amount of their 
redeemed notes. The utmost efforts are being made 
to push forward the assortment, and the Treasurer 
hopes soon to be able promptly to inform the banks 
of the amount of their notes redeemed by him. 

The Washington Chronicle says that the next call on 
national banks for reports of their condition will be 
made in October, and that up to this date the amount 
of circulation withdrawn by the deposits of legal 
tenders is greater than the amount issued since the 
passage of tlie new law by about §1,000,000, thus work¬ 
ing the contraction of the currency to that extent. A 
majority of the banks thus withdrawing their circula¬ 
tion are located in the South and West. 

A later Washington despatch says: “Bankers gener¬ 
ally, and especially those of the soundest and most 
conservative class, give the new system of redemption 
their hearty approval and support. The agency was 
at first much embarrassed by the lack of experienced 
counters and assorters, and of proper rooms and furni¬ 
ture. The department was badly crowded, and it was 
a difficult matter to provide rooms for over one hun¬ 
dred new employees. This difficulty has now been over¬ 
come, and the agency has now commodious rooms for 
its work. For a time the redemption fell somewhat 
behind the receipts, but returns are now being made 
within two or three days. The receipts now average 
over §300,000 a day, and will increase as- soon as the 
agency is able to receive the defaced and mutilated 
bank notes sorted out by assistant treasurers and depu¬ 
ties, as required by the new currency act. The assort¬ 
ment of tlie notes among the 2000 banks of the coun - 
try has been a task of really great difficulty, but 
this branch of the work is now progressing satisfac¬ 
torily. The treasurer has over §1,500,000 assorted 
ready for delivery to the comptroller of the currency, 















THE FINANCIAL RECORD. 


100 


« 


for which he lias called upon the banks of issue to re¬ 
imburse him in legal tenders. Further amounts are 
being prepared in the same manner, for which a call 
will be made upon the banks as rapidly as possible.” 


Inflation in the Confederacy. 

nr GEORGE CARY EGGLESTOX. 

[From the Atlantic Monthly.] 

The financial system adopted by the confederate 
government was singularly simple and free from tech¬ 
nicalities. It consisted chiefly in the issue of treasury 
notes enough to meet all the expenses of the govern¬ 
ment, and, in the present advanced state of the art of 
printing, there was but one difficulty incident to this 
jirocess; namely, the impossibility of having the notes 
signed in the treasury department, as fast as they were 
needed. There happened, however, to be several 
thousand young ladies in Richmond willing to accept 
light and remunerative employment at their homes, 
and as it was really a matter of small moment whose 
name the notes bore, they were given out in sheets to 
these young ladies who signed and returned them for 
a consideration. I shall not undertake to guess how 
many confederate treasury notes were issued. Indeed, 
I am credibly informed by a gentleman who was high 
in office iii the treasury department, that even the sec¬ 
retary himself did not certainly know. It was clearly 
out of the power of the government ever to redeem the 
notes, and whatever may have been the state of affairs 
within the treasury, nobody outside its precincts ever 
cared to muddle his head in an attempt to get at exact 
figures. We knew only that money was astonishingly 
abundant. Provisions fell short sometimes, and the 
supply of clothing was not always as large as we should 
have liked, but qobody found it difficult to get money 
enough. It was to be had almost for the asking. And 
to some extent the abundance of the currency really 
seemed to atone for its extreme badness. 

Monej r was so easily got, and its value was so utter¬ 
ly uncertain, that we were never able to determine 
what was a fair price for anything. We fell into the 
habit of paying whatever was asked, knowing that to¬ 
morrow, we should have to pay more. Speculation 
became the easiest and surest thing imaginable. The 
speculator saw no ri$ks of loss. Every article of mer¬ 
chandise rose in value, every day, and to buy anything 
this week and sell it next was to make an enormous 
profit quite as a matter of course. So uncertain were 
prices, or rather so constantly did they tend upward, 
that when a cargo of cadet gray cloths was brought 
into Charlestown once, an officer in my battery, attend¬ 
ing the sale, was able to secure enough of the cloth to 
make two suits of clothes, without any expense what¬ 
ever, merely by speculating upon an immediate ad¬ 
vance. He became the purchaser, at auction, of a case 
of the goods, and had no difficulty, as soon as the sale 
was over, in finding a merchant who was glad to take 
his bargain off his hands, giving him the cloth he 
wanted as a premium. The officer could not possibly 
have paid for the case of goods, but there was noth¬ 
ing surer than that he could sell again at an advance 
the moment the auctioneer’s hammer fell on the last 
lot of cloths. 

The prices which obtained were almost fabulous, and 
singularly enough there seemed to be no sort of ratio 
existing between the values of different articles. I 
bought coffee at forty dollars and tea at thirty dollars 
a pound on the same day. 

My dinner at a hotel cost me twenty dollars, while 
five dollars gained me a seat in the dress circle of the 
theater. I paid one dollar, the next morning for a 
copy of Examiner, but I might have got the Whig, Dis¬ 
patch, Enquirer, or Sentinel, for half that sum. For 
some wretched tallow candles, I paid ten dollars a 
pound. The utter absence of proportion between these 
several prices is apparent, and I know of no way of ex¬ 
plaining it except upon the theory that the unstable 
character of the money had superinduced a reckless 
disregard of all value on the part of both buyers and 
sellers. A facetious friend used to say prices were so 
high that nobody could see them, and that they “&ot 
mixed for want of supervision.” He held, however, 
that the difference between the old and the new order 
of things was a trifling one. “Before the war,” lie 
said, “I went to market with the money in my pocket, 
and brought back my purchases in a basket; now I 
take the money in the basket, and bring the things 
home in my pocket.” 


Inflationist's Column. 

[From the Jacksonville (Ill.) Sentinel.] 

Let us examine the process of resumption through a 
gradual retirement of the national banking currency 
and reasonable expansion. The government collects 
about $200,000,900 annually, in gold, as tariff duties; 
and, under a carefully revised revenue tariff it would be 
much increased. $110,000,000 of this amount must be 
used to pay the interest on the public debt, and tlie re¬ 
mainder is used to defray the ordinary expenses of the 
government, which are payable in greenbacks. Now 
then, if the remaining $00,000,000 in gold-received from 


tariffs can be left in the treasury each year, the return | 
to specie payment would not be distant. i 

Let Congress pass a law that $70,000,000 of the na- ! 
tional bank currency be retired, and $70,000,000 of new 
greenbacks issued annually, until the entire national 
bank circulation should be withdrawn, which would 
take a period of five years. This, of course, would 
make no expansion of the currency. Then let it also 
be enacted, that twenty millions of new greenbacks 1 
should be issued annually, as a reasonable and propor- j 
tionate currency expansion. This would make $90,- j 
000,000 annually of greenbacks coming into the treas- i 
ury, which could be used to help defray expenses of j 
the government, instead of using the $90,000,000 of I 
gold receipts in excess of interest to be paid, thus sav¬ 
ing up $90,000,000 in coin annually as a reserve pre¬ 
paratory to specie resumption. 

At the end of three years after this policy should be 
inaugurated, there would be in the treasury $270,000,- 
000 in gold, and $270,000,000 of new greenbacks being 
issued, there would be six hundred and fifty-two mil¬ 
lion in circulation, the government having over one- 
third of-a coin reserve with which to resume specie 
payment, with $90,000,000 annually coming in to back 
up the reserve, if necessary. 

Thus, the government would be in a defiant condi¬ 
tion to resume in three years, through national bank 
abolition and expansion. Then, after specie payment 
is thus resumed, as the Chicago Tribune says, green¬ 
backs would circulate as freely as ever. The fact is, 
that as soon as this policy should be adopted by the 
government, greenbacks would immediately advance, i 
as the day certain for their redemption on demand 
ivonld be fixed, so that, when the time would come to 
announce resumption, those notes would already be 
advanced to par, and but few, comparatively, would- 
really be presented for redemption, and what were 
would soon be paid out again by the government. 
Such a policy, is the only true policy of resumption. 


More Party Platforms. 

The sound-money Democrats in Illinois, on the 26th, 
conquered the Richardson and Singleton revolt and at 
their State Convention in Springfield, passed the fol- I 
lowing brief but sufficient declaration of principles: 

Resumption of gold and silver as the basis of the ! 
currency, and the resumption of specie payments as 
soon as possible, without disaster to the business in¬ 
terests of the country, by steadily opposing inflation 
and by the payment of the national indebtedness in the 
money of the civilized world. 

The Ohio Democrats made a worse mess of their 
platform on the whole than their Indiana brethren did. ; 
Both the Thurman and the Pendleton wings of the 
party got something into the platform, which stands J 
thus: 

Resolved, That sound currency is indispensable to j 
the welfare of the country; that its volume shall be i 
regulated by the necessities of business, and all laws ! 
that interfere with such natural regulations are vicious i 
in principle and detrimental in their effects. We are i 
in favor of such increase in the circulating medium as 
the business interests of the country may from time to 
time require; that sound policy and justice require 
that not less than one-half of the custom duties should 
be paid in legal tender notes; that the power of the 
national banks to issue and loan their notes upon in¬ 
terest is a power to draw interest upon their debts 
while the people pay interest upon what they owe; i 
that this special and unequal privilege ought not to 
exist unless it is manifest that iu no other way can 
sound paper currency be supplied. Believing that a 
better system can be devised, and one that will be free 
from unjust privileges, we are in favor of abolishing 
the franchise of the national banks to issue paper cur¬ 
rency as soon as the same can safely be done, and that 
notes so withdrawn be substituted by the government 
with a legal tender currency; that the democracy of 
Ohio reiterate their declaration that the 5-20 bonds, by 
the letter and spirit of the law and the general under¬ 
standing of the community, were payable in legal ten¬ 
der notes, arid the act of March 1869, which pledged 
the faith of the nation to their payment in coin, was 
an unnecessary and wicked sacrifice of the interests 
of the tax-paying laborers for the benefit of the non¬ 
tax-paying bond-holders.' 

The Kansas Republicans blow hot and cold in the 
following fashion: 

That as the policy of the Republican party, in rela¬ 
tion to finances, has offered the people not only a 
sound and popular currency of equal and uniform 
worth in every portion of the commonwealth, but has 
greatly improved the credit of the country at home 
and abroad, we point with pride to its record and 
accomplishment in this regard, and, reaffirming the 
policy announced by the party in the National Con¬ 
ventions of 1868 and 1872, and triumphantly indorsed 
by the people at the polls, a policy which, while contrib-^ 
uting to the public credit, has also enhanced the individ¬ 
ual and collective prosperity of the American people, 


| we favor such legislation as will render national bank- 
I ing free to all, under just laws, based upon the policy 
of specie resumption at such times as it tnay be con¬ 
sistent with the industrial interests of the country, to 
the end that the Volume of currency may be regulat¬ 
ed by the natural laws of trade. 

If there is anything on either side omitted in this 
comprehensive and meaningless sentence, we forget 
what it is. Oh, yea ! the national banks are not de¬ 
nounced That seems to be a plank reserved for the 
Democrats, who even in Pennsylvania, take that turn. 
The rest of the Pennsylvania platform has not come to 
hand as we write. 

The Michigan Republicans in their platform are as 
sound as the Illinois Democrats, except that they feel 
obliged to compliment the new currency law, and are 
not very clear as to how resumption is to come. They 
say: 

We indorse, as wise and timely, the financial mea¬ 
sure finally agreed upon by Congress between the cfen- 
flieting interests and the opposing theories. While we 
recognize in the greenbacks and national bank notes a 
circulating medium far superior to any paper currency 
heretofore existing in the United States, saving, as it 
does, the people, directly and indirectly, many mil¬ 
lions of dollars annually over the old State banking 
system and exchange and discounts, we demand that, 
in all financial legislation, Congress shall keep steadily 
in view the resumption of specie payments, to the 
end that at the earliest day practicable the promises to 
pay of the government may be equivalent to coin in a 
like amount throughout the commercial world. We 
believe that banking, under a well guarded national 
system, should be free, at the volume and locality of 
issues being regulated by the business law of demand. 
We denounce repudiation in any form or degree. 

The following minority resolution was also adopted 
in the Michigan Convention: 

Resolved, That we believe a return to a gold basis 
should speedily be made; approve and adopt the prin¬ 
ciples of finance embodied in the veto message of 
President Grant to what is known as the Senate Cur¬ 
rency Bill, and affirm that part of the thirteen resolu¬ 
tions adopted at the National Republican Convention 
held at Philadelphia, in 1872, relating to the lesump- 
tion of specie payments. 


.Resumption must be through Contraction. 

The first issue of Governmeut legal tender notes 
came upon a country more in need of, and more fitted 
to render available a national paper money, than any in 
the history of the world. It was like irrigation upon 
a desert, causing the wilderness, even in that terrible 
time of civil war, to blossom like the rose. But the 
gentle stream which fertilizes may become the roaring 
torrent to destroy. The wanton and excessive issues 
of greenbacks forced prosperity on to wild speculation. 
$o much of the war account as could be settled with 
blood was promptly met, but the financial sacrifice 
has never been encountered, and writhe and struggle 
as we may, we cannot escape it. Mr. McCulloch’s 
first attempt at contraction produced the inevitable 
stringency, but Congress stopped the work as if such 
a result was not to be thought of. The panic last fall 
was a foretaste, and it is to be feared but a foretaste, 
of a stern process to be gone through, but instead of 
the acceptance of the lesson, it was made the pretext 
for a cowardly retreat to further inflation. It by no 
means appears, however, that the latter is in accord¬ 
ance with the sober sense of the country. 

It is said, and I believe with truth, that no nation 
has ever resorted to an inconvertible currency without 
ultimate, at least partial repudiation. But then no 
other nation has ever had recourse to this expedient 
till its credit was exhausted and the inability to bor¬ 
row left no other alternative. Our case was the exact 
reverse of this. History will record with wonder that 
the United States adopted, or at least persevered in, 
this ruinous policy from simple reluctance to sell a six 
per cent, bond below par. There has never been a 
moment since the war when our Government could not 
have funded any amount of greenbacks necessary for 
a return to specie payments by the sale of bonds, at 
what, with reference to the commercial standard of 
the country, may be called very reasonable rates. 
That this operation will be ultimately submitted to, 
we refuse to doubt, but to what extent the contraction 
must be carried, and with how much of disaster to in¬ 
dividuals, must depend on the degree of efficiency and 
intelligence in administration. The ship will weather 
the storm, but whether she comes into port dismantled, 
and reduced to a hulk, or with the loss only of a few 
light sails and spars, will depend upon the seamanship, 
the strength and steadiness of the hand at the helm. 
Of course, I do not refer to any permanent-destruction 
of the wealth of the country, but to the question 
whether thousands or hundreds of individual fortunes 
shall be wrecked and families beggared.— G. Bradford, 
in Journal of Social Science. 











































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FINANCIAL RECORD. 

“WE NEED ONE THING BESIDES MORE MONEY, AND THAT IS BETTER MONEY .”—Senator Zach. Chandler. 


VOL. I. 


FRIDAY, SEPTEMBER 4, 1874. 


NO. 31. 


_ The Financial Record will be continued until further no¬ 
tice, and will be sent free of postage, to all persons who will re¬ 
mit 50 cents to the publishers. All editors who receive it are 
invited to send their papers in exchange. It will no longer be 
published by the American Social Science Association, 
but for the present, as heretofore, communications respecting 
it may be addressed to the Secretary of the Association, F. B. 
Sanborn, No. 5 Pemberton Square, (Room 21,) Boston; and all 
exchange papers, public documents, etc., may be forwarded to 
the same address. 


Financial Events and Possibilities. 

It is still true that no party stands, as a party, on 
the firm position of a hard-money platform. The 
Maine, Vermont, Michigan and Ohio Republicans, the 
opposition party in Illinois, and some other organiza¬ 
tions, have declared with more or less distinctness and 
vigor, for specie payments and National honesty. To 
offset these, the Illinois Republicans, the Ohio and 
Missouri Democrats, and both parties in Indiana, 
with some others, have yielded to the charlatans, and 
pronounced for a wild-cat currency. On the whole, 
the atiitude of both parties is one of startled and 
alarmed neutrality. The platform-makers are in 
amazement at finding that the condition of the curren¬ 
cy has really become the basis of a new and living is¬ 
sue, and in their fear of taking a step the wrong way, 
they point one foot in each direction, and stand ready 
for either, as soon as they find which route is to attract 
the larger crowd. Now since the currency is the basis 
of a living issue, and neither party is wholly sound, 
the duty of hard-money men is plain. It is necessary 
to show the party managers that we are neither to he 
put off with unmeaning generalities nor deluded 
with promises. This can only be done by the most 
independent kind of bolting when infiationist candi¬ 
dates are put in nomination. It would be folly to 
cheat ourselves into believing that we can safely and 
wisely vote for any Congressional candidate who will 
advocate inflation in any shape. We address ourselves 
to those who intend to follow conscience in this mat¬ 
ter; and to such we say that no party ties ought to 
bind us where candidates are selected who are known 
or suspected to be inflationists. To abstain from vot¬ 
ing is better than do vote against one’s convictions on 
a vital principle; to abandon the party candidate (if he 
is unsound on the currency) for another who is sound, 
is better; and if no candidate is to be trusted, no vob- 
er should hesitate to set up one of his own and vote 
for him. This is a good year for bolters. 


The monthly statement of the United States debt 
for August shows that on the 1st of September the 
whole debt, less the cash in the treasury, was $2,140,- 
178 614, or adding in the Pacific Railroad debt, (which 
the people will probably have to pay, and which now 
amounts to $83,560,216,) the total debt is $2,223,738,- 
830. Of this aggregate, $428,000,000, or nearly 
one-fifth consists of greenbacks and fractional curren¬ 
cy. The national debt of Great Britain, August 1, 
was .£785,761,761, or in American gold about $3,900,- 
000,000, that is to say, nearly double our debt. The 
decrease in th*e British debt in 26 years has been about 
$60,000,000; of our debt, in njne years, about ten 
times that. 


The Treasury Department seems to have made a 
mistake in allowing the banks to remit national bank 
notes instead of legal tenders, as required by law, for 
the redemption business is cheeked by the exhaustion 
of the five per cent greenback fund. By allowing na¬ 
tional banks to keep up this fund by remittance of oth¬ 
er bank notes, which, according to the theory, would 
instantly be converted into legal tenders at the Treas¬ 
ury, it appears that greenbacks are constantly going 
out and nothing but bank notes coming in. The 
Treasurer will, therefore, compel hanks to remit in 
legal tender notes as the law provides, and as lie should 
have done before. If the banks hold any bills which 
they wish redeemed, of course they can send them in; 
but let it be for redemption, and not for the five per 
cent fund. Let each bank provide for the redemption 
of its own notes, and if the government does not then 
promptly redeem, the banks will have good cause for 
complaint. This business of dispensing with the law 
when the Treasury officials take a notion, has been 
carried much too far already. 

Quite as dangerous is the constant tendency at 
Washington, to act the part of a “pistareen Provi¬ 


dence,” as Mr. Emerson says, and adapt operations 
to the supposed necessity of “moving the crops,” in a 
particular fashion. It seems that the Jay Gould and 
Jim Fisk theories on this subject, which all will remem¬ 
ber in connection with the Black Friday of 1869, are 
still in vogue. A New Y r ork paper says; 

It is a well known fact that we are right on the eve 
of the marketing of the crops, and the commencement 
of the export season, when there is a good supply of 
cotton and grain bills of exchange. Now evei’y busi¬ 
ness man knows it is important to producers and mer¬ 
chants, that a fair price should be realized for sterling 
hills drawn against shipments of produce. If the syn¬ 
dicate hankers should be forced into the market, as 
heavy sellers of exchange, in order to get gold to pay 
for called bonds, then the sterling markets would be de¬ 
pressed, possibly to the importing point, in which event 
the bank of England would raise its rate, and our en¬ 
tire trade relations be disturbed. To avoid all these 
contingencies, the Secretary , actiny in full accord with the 
Syndicate , has taken the course of calling in the five-twen¬ 
ty bonus in comparatively small instalments. 

It is such things as this, that give point to the charges 
made by the California newspaper, quoted in another 
column. The business of the Treasury Department 
is to mind its own business, not to take care of the job¬ 
bers or brokers. 


The last week’s status in the banks of New York city, 
which set the tune for all tlie banks in the country, 
differs but little from that of the week previous, as 
will be seen by the following figures: 

Week ending Aug 22. Aug. 29. 

Loans.§278,570,000 §278,319,800 

Specie. 19,554,900 18,638,100 

Legal tenders. 65,891,400 67,282,600 

Deposits . 234,864,100 235,000,100 

Circulation. 25 820,000 25,803,300 

The variations are as follows: 

Loans decrease... §256,200 

Specie decrease . 916,800 

Legal tenders increase. 1,391,200 

Deposits increase . 136,000 

Circulation decrease .'. 16,700 

Increase in reserve $440,400, which is a little less 
than the difference between the loss of specie and the 
gain in greenbacks. 


The Political Conventions. 

In the two old .parties now contending for the con¬ 
trol of the next House of Representatives, so far as 
the resolutions of State Conventions go, “honors are 
easy,” as they say in whist, and the game, as the poli¬ 
ticians always think, is to be decided by tricks. Thus 
the Democrats in about half the States go for sound 
money, in the other half for inflation and repudiation. 
In Tennessee, in their recent State Convention, they 
have planted themselves by the side of the Democrats 
of Indiana in endorsing the Pendletonian swindle. 
Tennessee Democrats say: “We favor the abolition 
of the present odious national hanking system and the 
payment of the bonds of the government by the issu¬ 
ance of its non-interest-bearing notes, according to 
contract expressed and implied at the time of the crea¬ 
tion of such obligations.” The party in both States, 
and in Ohio, proposes to pay the bonded debt of the 
government by the issue of greenbacks; and as to the 
payment of these greenbacks, in respect to the ques¬ 
tion of both time and method, these honest Democrats 
are ominously silent. 

In the latter State, Pendleton himself is again the 
party leader, and all the stronger because his rival, 
Thurman, weakly offered a compromise that was re¬ 
jected, the Convention being satisfied with nothing less 


to inflation, the democracy have been much braver, 
declaring that “a steady effort should be made to 
bring the government notes to a gold basis, and a 
speedy return to specie payments.” In Illinois, the dif¬ 
ference between parties on this question is still worse 
for the Republicans. The Republican Convention 
contrived to sanction, in a fashion, the wild views of 
Senator Logan concerning finance. The men in that 
State who know what they want, and have the cour¬ 
age to declare it, united in a call for a Convention and 
the democracy were wise enough to respond to it. A 
few attempted to hold a straight Convention, but it 
was a feeble demonstration, and the declaration of the 
new party contains the Soundest statement of financial 
doctrine yet enunciated. 

The Republicans of New Jersey and Michigan have 
done well on the currency question, and those of Kan¬ 
sas are not quite so hopeless as the Ohio and Missouri 
Democrats. But in Michigan, instead of approving, as 
was reported last week, the President’s veto message, 
they really rejected the minority resolution, and only 
indorsed as wise and timely the compromise measure 
finally passed by Congress. For the rest, they were 
content to “demand that Congress shall keep steadily 
in view the resumption of specie payment.” In New 
Jersey, the Republican convention did only what was 
expected of it in favoring “such legislation as will se¬ 
cure a speedy resumption of specie payments.” 

The Ohio Republicans do not come much behind the 
Illinois Democrats on the soundness of their platform, 
adopted on the 2nd inst., and in State Convention at 
Columbus, and reading as follows: „ 

We denounce all forms of open or covert repudia¬ 
tion, and demand that the debt of the United States 
be paid in accordance with the letter and spirit of the 
laws uilder which it was created, and it is the duty of 
the national government to adopt such measures as 
shall gradually, but certainly, restore our paper money 
to specie payment, without a sho k to the business in¬ 
terests of the country. When the currency shall have 
been restored to a specie value, banking should be 
made free, so that the circulating medium may be ex¬ 
panded or contracted, according to the demands of 
commerce and trade. 

An Illinois Congressman has lately, upon being re¬ 
nominated by a unanimous* vote, made a speech on 
the currency, which is a good illustration of the way 
public men at the West, who are not inflationists at 
heart, feel bound by party necessities to talk on the cur¬ 
rency question. We allude to Hon. Isaac Clements, 
who, according to the report of his speech, addressed 
himself specially to the questions of currency and 
transportation. He declared that those two questions 
overshadowed all others; that our currency was in an 
abnormal state, so to speak, but that the nation was 
trying to fix its status. He added: 

This must, and will, be settled, and then it must be 
“let alone.” In settling it, certain principles are in¬ 
volved: First, so long as we have a commercial nation, 
gold must he the measure of values. Second, our do¬ 
mestic currency should be national in its character; 
worth as much in one State as in anotlier. Third, it 
should be a fixed value, not liable to fluctuate. Fourth, 
it should be as near par with gold as possible. Fifth, 
it should be sufficient for the business affairs of the 
country, so that we should not be subject to the stag¬ 
nation in trade that has been seen for the past few 
months. He said he was not in favor of an inflation 
of the currency, hut there should be enough money 
for business, and that business should regulate the sup¬ 
ply. As to how this should he effected men were di¬ 
vided, each having his own views. Congress could do 
no more than debate and discuss this question until it 
reaches the point desired. 


than one declaration to increase the irredeemable “cir¬ 
culating medium,” and another in favor of paying the 
debt in greenbacks. To this doctrine the democracy 
of Missouri are converts. There is, however, in the 
latter State a large body of men who have heretofore 
acted with the Democrats, but may be expected now 
to act with an independent party that will command 
the support of many Republicans. The representative 
of this movement is Senator Schurz, and its State 
Convention was held last Tuesday. 

In two other great States, however, the Democrats 
have done better. In Pennsylvania, where the Repub¬ 
licans put forth some unusually obscure resolutions as 


The Business Prospect, 

The New York Independent , which ought to he an au¬ 
thority in regard to the dry goods trade, insists that the 
croakers have exaggerated the dullness in that branch 
of business. It says: 

The real truth is that business thus far has been 
very good, and the prospects are all flattering of its 
being much better. The_movement of the crops has 
commenced early, and, as the whole business of the 
country, more especially the dry goods business, de¬ 
pends upon the agricultural products of the West, 
there is every reason for believing that they are so 
















































103 


TI1E FINANCIAL RECORD. 


abundant as to leave no room for doubt as to the busi¬ 
ness prosperity of the country this year. The regular 
current of trade has been resumed and the return of 
the holiday-seeking operators to their accustomed 
places of business has commenced, and a very marked 
change has been the result. There is nothing to en¬ 
courage the expectation of a wild speculative move¬ 
ment this fall, but everything to encourage the belief 
iu a sound and large amount of regular business. 

A New York firm, Messrs. Dun, Barlow & Co., have 
been at the pains to collect evidence from their agents 
in all parts of the country, and give the result in their 
circular of August 27. They say that the indications 
for some months have been all in favor of renewed 
activity in commercial circles. The indebtedness is 
small, the stocks light, economy general, and the crops 
abundant. Monetary facilities are adequate, and the 
financial system more settled than ever before for 
years. They add: 

It may be doubted if ever before in the history of 
this vast continent there were more millions of dollars’ 
worth in the hands of producers than now. Since 
the panic there has been little opportunity for the 
putting out of money into general circulation. Money, 
therefore, accumulated at the great centers, and all 
the winter and spring and summer there has been a 
plethora of money in New York, Boston, Philadelphia 
and Baltimore, while in other cities it has been scarce, 
and in almost all country localities almost impossible 
to obtain. The consequence has been small remit¬ 
tances from country merchants, equally difficult pay¬ 
ments in their turn from jobbers, thus causing a severe 
strain upon the resources of importers and manufac¬ 
turers But if ever relief was promised from any 
pressure it is now; the abundance that the earth has 
produced is not only certainly secured, but it is so 
universally diffused, will need to be gathered from so 
many hands, and from such varied sections of the 
country, that literal streams of currency will be set in 
motion all over the land, which ought soon to give ease 
in money, and restore business in merchandise to its 
normal condition. » 

It will take some months to accomplish all that is 
hoped for in this movement, for the very abundance of 
the product may retard the realization. Lower prices 
than have been paid for some time may prevail,- and 
farmers and planters are slow to sell in a declining 
market. We have heard of cases where suits for col¬ 
lection of debts have been defended for time, in the 
hope of a rise in price. But whether it takes weeks 
or months, whether the deliveries are early or late, 
the wealth is in the country, and must be realized. 


Spirit of the Press. 

[St. Louis Republican.] 

It is well known that the Republican long since aban¬ 
doned the hope of reforming the Democracy of St. 
Louis inside the party, and that it has sought to en¬ 
courage a feeling of independence relative to politi¬ 
cal movements—to loosen party ties and to stimulate a 
sentiment favorable to the selection of good men for 
representative places, in spite of the tyranny of cliques 
and combinations. We have no disposition to magni¬ 
fy the late triumph of the ring-rulers, however much 
it justifies our predictions and apprehensions as to the 
incompetency of the St. Louis Democracy to take 
charge of her interests. The Democracy of St. Louis 
County can carry nothing here before the people. The 
voters will bury its local nominations under an enor¬ 
mous load of obloquy. There will be “ceaseless 
yearnings for revenge” from now till the day of elec¬ 
tion in November. 

[Springfield Republican.] 

We notice that some, people at the East, who ought 
to know better, are proposing to substitute greenbacks 
for bank notes. The Tribune makes this proposition 
seriously. We beg to suggest that while their circula¬ 
tion is of very small profit to the city banks, which 
have large deposits, it is of the very first importance 
to country banks, which have hardly any deposits at 
all. The West never will have banks except in the 
cities, unless the banks are allowed to issue notes. 
But it is really banks that the West wants, not curren¬ 
cy. From the moment that we take away the induce¬ 
ment to establish banks in the West and South, from 
that moment we may expect to hear the mistaken cry 
go up for “more money,” at every session of Congress. 
No; our banking system is safe, it is free or can easi¬ 
ly be made so, it is sufficiently profitable to insure the 
diffusion of banking facilities and habits all over the 
country. Let us preserve these admirable qualities. 

[Hartford Courant.] 

Both parties are passing through a critical trial of 
their fitness to live. In certain sections the Republi¬ 
cans are committing suicide. Every time they twad¬ 
dle in favor of more paper and leave the gospel of 
finance to be preached by the democracy, as in Illinois, 
they are driving nails in their coffin. It is probable 
that the democracy in general may be bigger fools, as 
they certainly were in Ohio, but that will only kill 
them without saving the Republicans. The next Re¬ 


publican National Convention will go heartily for the 
soundest and highest doctrines of finance, or it. will go 
skyward in fragments. 

[N. Y. World.] 

The union of Illinois and New York for free trade, 
hard money and home rule resolves the present politi¬ 
cal chaos at the West into order, and fixes irrevocably 
the dividing line between the two great political par¬ 
ties—a deep dividing line of principle older than the 
Republic, yet new as the necessities of the present 
hour. Ohio and Indiana, this fall, are a little out of line, 
fighting the devil with fire, using Mortonism to Scotch 
Republicanism in the Ohio valley. 

[Boston Post.] 

Were the secrets of State politics easier in all cases 
to understand, it might be possible to comprehend the 
peculiar influences which have imposed so mistaken an 
expression of sentiment upon the body of the Ohio 
Democrats. A few Democrats have been successfully 
misled by the designing Mortons of Republicanism. 

The Missouri Democracy, who drafted an excellent 
platform of principles, and then weakened the noble 
structure by the position taken in regard to the dobt, 
were more successful in their choice of a ticket, and 
nominated one that is above criticism in almost every 
respect. 

[San Francisco Alta California.] 

There seenis to be no effort, as yet, made at the East 
in the direction of specie payments, and it is appar¬ 
ently in vain to look for any initiative movement on 
the part of the Government at Washington. One 
source of its revenue is selling gold, which gives it 
about §500,000 per month premium. It collects gold 
from the customs to the extent of about §200,000,000 
per annum, and it sells of this in the market, $60,000,- 
000 at a premium of at this time, ten percent, in 
greenbacks, which gives $6,000,000 per annum not 
voted by Congress. It draws $8,000,000 per annum in 
gold from California for taxes, and sells it iu New York 
to speculators for ^8,800,000 of its own dishonored 
notes, which it forces its creditors to take at par. 
This gigantic gold jobbery is the attraction for the 
ring, or Syndicate, or whatever name it assumes, 
which .surrounds the Treasury and fattens upon its 
spoils. The jobbery attached to the collection and 
sale of $60,006,000 gold per annum is not to be easily 
relinquished, and that unlimited power lodged in the 
hands of the Secretary of the Treasury is the real 
obstacle to resumption. No perceptible difference 
would attend values if resumption took place to-mor¬ 
row. Let us see. In the fiscal year ending June, 1865, 
the currency was §201 to 100 gold dollars; in 1874 it 
was $113 to $100. Here was a fall, or contraction, of 
$88, or 44 per cent., but there was no wide-spread dis¬ 
aster. 

[Terre Haute (Ind.) Express.] 

There is a marked inconsistency in the Democratic 
State Platform on the currency question, and it is re¬ 
peated in Mr. Voorhees’ speech. The Democratic 
platform indorses the plan of paying the five-twenty 
bonds in greenbacks, and it also favors a return to 
specie payments. What advantage there is in paying 
the five-twenty bonds in greenbacks and in then mak¬ 
ing the greenbacks as good as gold, the public will not 
be able to see. While Mr. Voorhees seems desirous to 
postpone a return to the specie basis for a long time, 
he yet intimates that the return must be made. 

[Jacksonville (Ill.) Sentinel.] 

Taking advantage of the old traditions of the Dem¬ 
ocratic party in favor of hard money, these foreign 
bond-holders seek to make the party now, when the 
country owes five billions of debts, the cat’s-paw to 
ruin a nation of 40,000,000 of people. Hard money is, 
unquestionably, Democratic, but it is vastly more Dem¬ 
ocratic to take the side of this 40,000,000 of people 
struggling to pay five billions of debt, against a few 
bondholders who are endeavoring to foreclose on this 
people, both financially and politically'. 

[Quincy (Ill.) Herald.] 

To secure a triumph over the office-holding, Credit- 
Mobelier, shinplaster party, we must cement in close 
fellowship all honest men who seek the restoration of 
our governments, State and national, to honest hands. 
In tins State the initiatory step to such a union has 
been taken by the Democratic State Central Committee 
and the Liberal and German Republicans speaking 
through distinguished leaders, have cordially met our 
advances. It rests, therefore, with the democracy of 
Illinois to give vitality and force to this political fel¬ 
lowship by working shoulder to shoulder with their 
new allies for a common purpose, the overthrow of the 
party in power and the redemption of the republic 
from misrule and corruption. In this State we have a 
solid majority of sixty thousand to butt against, and 
who is there that believes for a moment that the Dem¬ 
ocratic party can batter it down single handed ? 


Au Open Letter of Inquiry. 

TO THE REFORM PRESS OF KANSAS. 

The Reform Convention in this State has adopted a 
financial plank demanding a legal tender currency 
solely. We have searched the columns of the reform 
papers in vain for any defense or explanation of this 


remarkable policy. Several subjects of inquiry' con¬ 
nected with it suggest themselves to the public mind, 
touching which the platform of the reformers is not 
explicit. With a view to open the way for an expla¬ 
nation of these matters, we address to the reform jour¬ 
nals the following inquiries: 

1. Before adding $354,000,000 to the present volume 
of greenback currency, by the substitution of legal 
tenders for bank notes, is it proposed to make any 
provision for the redemption of the new issue, or for 
the redemption of the existing issue ? 

2. Do the reformers desire a return to specie pay r - 
ments at all ? 

3. Can the use of such a currency as demanded, for 
the payment of both “public and private dues,” be 
reconciled with existing obligations concerning the 
payment of the public debt and the interest thereon ? 

4. Can the measure proposed be reconciled with the 
act of Congress, pledging the faith of the nation that 
the entire volume of legal tenders should never ex¬ 
ceed $400,000,000 ? 

5. As a permanent “legal tender” currency is to be 
adopted, is it the design to continue in permanent cir¬ 
culation the amount that will exist after the substitu¬ 
tion of legal tenders as proposed ? Or is there to be a 
contraction of the volume ? 

6. When, under the proposed system, an increase 
of circulating medium is desired, how are the notes to 
be put in circulation ? Is the government to get them 
in circulation in the usual way as to such notes, name¬ 
ly: by paying its officers, contractors and other credi¬ 
tors with them, or is it to discount every man’s note ? 

7. Is any permanent and regular system of redemp¬ 
tion to form a part of the new system, or is the specie 
basis to be permanently departed from ? 

8. Is there to be no check upon the amount of notes 
to be left at the discretion of Congress ? 

The Topeka platform affords no explicit solution of 
the above points, although they touch the very core of 
the financial scheme. Will the reform press explain 
them, or does it propose to drop the financial scheme, 
and shrink from explanation and defense of it. 

Nathan Cree. 

Independence, Kansas, August, 1874. 


How to Resume Specie Payments. 

Ex-Secretary McCulloch’s Plan. 

In a recent letter addressed to some gentleman at Cin- 
cinati who invited him to address them on the currency 
question, Mr. McCulloch, who preceded Mr. Boutwell 
in the Treasury department, has given utterance to the 
sound opinions he has always been known to entertain. 
He says: 

My opinions on the subject of the currency are well 
known by those who took the trouble to read my Fort 
Wayne speech, and my reports as Secretary of the 
Treasury from 1865 to 1869. The opinions I then ex¬ 
pressed, in language as strong and unequivocal as I 
could command, have neither been changed nor modi¬ 
fied. On the contrary they have been confirmed and 
strengthened by' further observation and reflection. 
I thought it to be the duty of Congress, considering 
the subject in its moral as well as its financial bear¬ 
ings, to adopt decisive and effective measures to bring 
about specie payments, and that the time for the adop¬ 
tion of these measures was at the close of the war. I 
did not think that “the way to prepare to resume spe¬ 
cie payment was to resume,” but I did think it of vital 
importance to the best interests of the country that 
the restoration of the specie standard should be the 
end and aim of all legislation bearing upon-the subject 
of the currency. 

THE WAY TO RESUME. 

My conviction was clear and decided that this could 
only be effected—within any reasonable time, and be¬ 
fore such financial disaster as has recently occurred 
would overwhelm the country—by retiring so much 
of the paper currency in circulation as would be neces¬ 
sary to bring up the residue to par. I thought that 
this could be accomplished without the occurrence of 
the apprehended disaster to the business of the coun¬ 
try, and without affecting in the least the real value 
of property; that,by a curtailment of the amount of 
inconvertible notes in circulation, the purchasing or 
measuring power of the remainder would be propor¬ 
tionately increased, and that consequently the amount 
of real money in circulation would not be thereby di¬ 
minished; that measuring property by a false stan¬ 
dard could not add to its value, nor by any a true 
standard reduce it. There was, it seemed to me, but 
one class, in the community, the debtor class, who 
could be benefited by a depreciated currency, and I 
was anxious that decided action for relieving the 
country of such a currency' should be taken immedi¬ 
ately after the close of the war, when indivdual in¬ 
debtedness was less than it had been for many years. 
It seemed to me, also, that the injury to this class 
from a reduction, and consequent improvement, of the 
currency, would be altogether less than was feared by 
them; that what honest and energetic debtors needed 



















was not legislation to enable them to pay their debts in a 
depreciated currency, but legislation that would give 
activity to well directed, not speculative, enterprise, 
and stability to business; that as, in fact one debt is, 
in the course of trade, usually paid by the creation of an¬ 
other, and the general indebtedness of the people is not 
ordinarily, from year to year, materially reduced, the 
debtor class itself was in no serious danger of being 
injured by the elevation of the standard of values, and 
that if debtors were to be injured by it, the injury 
would be small in comparison with that which had 
been inflicted upota the creditors through the Legal 
Tender acts, which compelled them to receive, in sat¬ 
isfaction of existing contracts, a currency of far less 
value than that which was the only lawful money at 
the time they were made, and who generally bore their 
losses without murmuring, as a sacrifice required by 
the Government in its struggles with a gigantic rebel¬ 
lion. 

MISCHIEFS OF IRREDEEMABLE PAPEK MONEY. 

At that time, in language which made up by explic¬ 
itness what it may have lacked in strength, I pointed 
out the danger and the immoral influences of an incon¬ 
vertible and depreciated currency. By every argument 
I could make, and every illustration I could bring to 
bear upon the subject, I endeavored to prove in each 
of my reports that,a depreciated currency was, and 
never could be anything else than, a positive, unmis¬ 
takable injury to the people, morally and financially; 
that in regard to such a currency there could be no 
“stand-still-until-the-country-grows-up’-to-'it” policy; 
that by wise legislation we should move toward specie 
payments, or by unwise laws, or by drifting without 
chart or compass, we should find ourselves upon finan¬ 
cial breakers before we were conscious of immediate 
danger. In my earliest utterances upon the financial 
question, in a free talk with my Fort Wayne friends, 
I remarked “that, while I regarded an exclusive metal¬ 
lic currency among an enterprising and commercial 
people, an impracticable thing, I regarded an irredeem¬ 
able paper currency as an evil, which extreme. cir¬ 
cumstances for a season might render a necessity, but 
which should never be sustained as a policy; that the 
legal tender notes were issued as a war measure, 
and, as the war had been brought to a successful ter¬ 
mination, measures should be taken for retiring these 
notes altogether, or bringing them up to the specie 
standard; that I had no faith in prosperity that was 
based upon depreciated paper money, and that I saw 
no safe path to tread but that which led to specie pay¬ 
ments; that the extremely high prices prevailing in the 
United States were an unerring indication that we 
were measuring property by a false standard; that the 
United States were becoming the best country in the 
world for foreigner to sell in, and the worst to buy in; 
that the longer inflation continued the more difficult 
would it be to get it back to the solid ground of specie 
payments; that if Congress should early in the ap¬ 
proaching session (1865-6), authorize the funding of 
the legal tender notes, and the work of reduction 
should be commenced and carried on resolutely, but 
carefully and prudently, we should reach the solid 
ground without serious embarrassment to legitimate 
business. If not, we might have a brief period of hol¬ 
low. and seductive prosperity, resulting ir> widespread 
bankruptcy and disaster.” Such were my sentiments 
then and such are they now. The truth is, gentlemen, 
and the reiteration of it ought not to be necessary, gold 
and silver are the only standards of value, and as long 
as we are a part of the great family of nations and 
are a commercial people, we can adopt no inferior 
standard without being greatly the loser by it. 

WHAT IS THOUGHT OF US ABKOAD. 

None but bankrupt nations, with the exception of 
the United States, keep in circulation an irredeemable 
paper currency—a currency which in their cases tends 
to produce and perpetuate the poverty it indicates. 
To the United States such a currency is utterly dis¬ 
reputable, since there is not the slightest necessity for 
it. That a nation so rich as ours, so grand in its re¬ 
sources, so vast in its productions, a nation which lias 
challenged the admiration of the civilized world by 
the rapid reduction of its public debt, commencing 
that reduction at the close of a war the most expensive 
that has ever been carried on, and actuahy reducing 
its indebtedness at the rate of nearly $100,000,000 a 
year, tlqit such a nation should for so long a period 
maintain a depreciated circulating medium,made law¬ 
ful money by statute, is to intelligent foreigners an in¬ 
explicable mystery. The specie standard ought to 
have been restored before now, and I believe it would 
have been if that great power in the land, the press, 
had given the doctrines enunciated from the Treasury 
Department from 1865 to 1860 the hearty endorsement 
it has given to similar doctrines when proclaimed by 
the President in 1874. If the financial trouble that 
has come upon us and the consequent prostration of 
the business in nearly all branches of trade, notwith¬ 
standing the plentifulness of currency, shall tend to 
correct the public sentiment in regard to the nature 
and offices of money, they will not be entirely without 
compensation. It required the sacrifice of a great war 
to uproot slavery; perhaps it required the experience 
of a great financial disaster to teach the people the 


THE FINANCIAL BECORD. 


danger of discarding the true measure of value, and 
substituting therefor the uncertain fluctuating standard 
of irredeemable legal tender notes. 

CONGRESS ALONE HAS THE POWER TO RESUME. 

It will be lamentable, indeed, if, instead of having 
profited by experience—our financial trouble, the re¬ 
sult of our financial mistakes—we shall cause a still 
wider departure from the paths of wisdom and safety. 
Real money—and the world always has had, and ever 
will have, plenty of it for legitimate uses—leaves or 
avoids countries that have an inferior substitute for it, 
no matter what other standard may be adopted by law 
or how the fact may be attempted to be disguised, for 
the value of all property is still regulated by it. The 
Legal Tender act compels the people of the United 
States to treat the greenback dollar as if it were a dol¬ 
lar in fact; but, except in payment of debts, it is not 
one. It has not the purchasing power of one. Its 
value has been forty-five cents; it is now ninety; a 
year hence it may be ninety-five or what it may be no 
man can tell. It is the paper dollar, not the gold dol¬ 
lar, that fluctuates, and is, therefore, an uncertain and 
dangerous standard. Can it then be doubted that it is 
the duty of Congress so to legislate as to make as soon 
as practicable, the paper dollar, of which it authorizes 
the issue, equal to the gold one ? The question then 
arises, what legislation is required to effect this most 
desirable result ? Our new Secretary is a gentleman 
of ability, and he belongs to a State in which good 
financial seed was sown at an early day, as has been 
proved by her high financial credit and the soundness 
of her banking institutions. I know not what his views 
are, but he would not be a true scion of Kentucky 
stock if he were unsound upon the financial question. 
If the management of our finances were in his hands 
I for one should be willing to take him upon trust, not 
doubting that he would pursue the right course to re¬ 
lieve the country from the burden—for so it is—of an 
irredeemable currency. But such is not the fact. 
His hands are tied. Congress is to determine what 
shall be our financial policy, and this determination 
may depend on the result of the approaching elections. 

As parties now stand, the financial question cannot 
be made a strictly party question, nor will it *be—as 
in the latter part of the late session it was feared 
might be the case—a sectional one. It is a question 
upon which there will be differences of opinion among 
men of the same party and the same State. 

MR. MCCULLOCH’S PLAN FOR RESUMPTION. 

That there should be speedy legislation and a definite 
policy established, every one who is not a gambler in 
business admits and desires. Nothing but further 
inflation can be worse than uncertainty upon a mat¬ 
ter so important to the well-being of the country as 
the currency. It is for these reasons that I now feel 
at liberty to give my opinion upon the financial legis¬ 
lation that is required. I state my views frankly, not 
as presenting the only way, but as that which seems 
to me the most certain and direct path for reaching 
specie payments. If a wiser plan shall be adopted, 
no one will be more pleased than myself. 

First —Congress should fix a period, say the 1st of Decem¬ 
ber, 1876—the time is not material if it be not remote—after 
which United States notes should cease to be a legal tender. 

Second —The Secretary of the Treasury should be author¬ 
ized to retire (by the use of the surplus revenue, and, if this 
should be insufficient, by the sale of bonds) at least $50,000,000 
of United States notes, per annum, until all have been retired, 
and he shall be prohibited from reissuing the notes thus re¬ 
tired, under any pretext or circumstances whatever. 

Third— In lieu of the United States notes retired an equal 
amount of bank notes, if they should be required, should be is¬ 
sued to National banks. 

Fourth —When the specie standard has been re-established 
by the repeal of the Legal Tender acts, banking should be 
made free, and Congress should cease to interfere with the 
currency, except so far as may be necessary to prevent illegal 
issues, and to provide that every dollar in circulation by 
authority of law shall be secured beyond contingency, as is 
now the case, by a deposit of United States bonds in the Treas¬ 
ury. 

THE PLAN EXPLAINED. 

It is obvious that so long as the United States notes 
are a legal tender, the specie standard will not be re¬ 
stored. These notes should be gradually retired, be¬ 
cause until the volume is reduced they will not per¬ 
manently improve in value, and because, until the 
banks perceive that the reduction is actually taking 
place, they will make no effort to supply themselves 
with coin for the protection of their own circulation. 
It will be safe to provide for an issue of notes for sup¬ 
plying the place of United States notes as they may 
be" retired, because the bank notes will not be applied 
for, if the business of the country does not require 
them, and because they ought to be furnished if it 
does. It is not likely that an issue of bank notes, cor¬ 
responding to the amount of United States notes with¬ 
drawn, will be required, as the value of both kinds of 
our paper money will be steadily increasing, and spe¬ 
cie will be taking the place of paper as a reserve of the 
banks, and ultimately, as a circulation among the 
people. This will be a self-regulating matter. As 
the United States notes are retired, the banks will for¬ 
tify themselves with coin, so that when the time of 
coin redemption comes round, they, will be prepared 
to meet the calls which may be made upon them, but 
which cannot be large, as the preparation for this 


104 


state of things will have brought the business of the' 
country into a healthy condition, and there will be 
little demand for coin for exportation. Nor will this 
withdrawal of United States notes preparatory to’a re¬ 
turn to specie payments, nor the return itself, affect 
the value of property or disturb business. 

THE REPUDIATING DEMOCRATS. 

There is another subject to which I should not al¬ 
lude, if there was not a “plank” in the “platform”' 
adopted by the recent Democratic Convention at In¬ 
dianapolis in favor of the payment of five-twenty 
bonds in greenbacks. Although it is known that party 
platforms are usually made to be disregarded and 
“spit upon,” the expression of such a sentiment by an 
intelligent and highly respectable body of men, claim¬ 
ing to represent a great political party, whose record 
upon financial questions has been most creditable, is 
calculated to mislead well-meaning people, if not to 
damage the National credit. This subject is rapidly 
losing its interest in a pecuniary point of view, by the 
fact that the six per cent, five-twenties are being rap¬ 
idly converted into five per cents, which, in order to 
prevent any question in regard to the currency in 
which thep are to be paid, are on their face made 
payable in coin. Still, presented as the resolution has 
been for the consideration of the voters of Indiana, it 
is not without importance. I feel it to be important 
because it affects the good name of my own State. 
That such a proposition should be revived by men 
claiming to represent democracy indicates a want of 
poetical sagacity on their part and an abandonment 
by them of principles to which the Democratic party, 
in the palmy days of its greatness and power, conscien¬ 
tiously adhered, and which it must again avow and 
adhere to if it is to become the party of the future as it 
has been of the past. If this resolution of the Con¬ 
vention truly expresses or reflects the sentiment of the 
democracy of Indiana it is to be hoped that the spirits 
of Jefferson and Jackson, of Benton and Wright, and 
the host of other Democratic worthies whose fame is 
the nation’s pride, do not witness the apostacy of 
those who claim to be their followers. That the five- 
twenty bonds should not and cannot be paid in depre¬ 
ciated greenbacks is evident, for the following rea¬ 
sons:— 

First.— These bonds are National obligations, intended to be 
circulated and held in foreign countries as well as in the Unit¬ 
ed States, and all such obligations are always nnderstood to 
be payable in the currency which alone is recognized as money 
by the common consent of the great family of nations. 

Second.— They cannot be paid in greenbacks, because it 
could not be done without increasing the issue of legal tender 
notes beyond $400,000,000 ; aud a large portion of these bonds 
were issued after the faith of the Government had been pledg¬ 
ed by act of Congress that this should be the limit, and also 
because Congress by a special act, in 1869, declared that these 
bonds were payable in coin. 

Third.—B ecause it was the express understanding between 
the Government and the people when these bonds were issued 
that the principal as well as the interest should be paid in coin. 

The language of the Indiana resolution, “We are in 
favor of the redemption of the five-twenty bonds in 
greenbacks, according to the law under which they 
were issued,” if not positively untrue, is calculated to 
mislead. That these bonds should be payed in green¬ 
backs is not in accordance with the law under which 
the issue was made. The reverse is the fact. It is 
true that the law does not expressly state that they 
are payable in coin, but it is provided that the interest 
be so paid. If it is silent in regard to the principal it 
is because no one at that time regarded the United 
States notes as anything else than a temporary cur¬ 
rency, which was to be redeemed or retired by conver¬ 
sion into bonds long before the bonds by their terms 
would be brought under the control of the Govern¬ 
ment. Who, in fact, ever heard of a National obliga¬ 
tion the interest on which was payable in one kind of 
currency and the principal in another and depreciated 
kind ? and what would be thought of a people who 
should take advantage of the technical construction of 
their own law and compel the holders of their bonds to 
take in payment their own dishonored paper, notwith¬ 
standing their servants in the Treasury Department, 
their servants who solicited subscriptions and the pub¬ 
lic press, with the full knowledge and approval of the 
law-making power, had represented the principal as 
well as the interesfof the bonds to be payable in coin? 
By every member of the House and of the Senate who 
participated in the debate when the subject of the is¬ 
sue of these bonds was under consideration, and who 
in terms alluded to them, they were spoken of as “gold 
bonds.” To repudiate all these promises now the peo¬ 
ple of the United States would reach a depth of degra¬ 
dation and dishonor to which no nation has yet de¬ 
scended. The statement of the proposition, stripped 
of all its disguises, is euough to condemn it in the estL 
mation of all honorable men. It is not, I am sure, in 
harmony with the sentiments of a majority of the 
Democrats of Indiana. As a bid for votes the resolu¬ 
tion of the Convention was a blunder, which in politics 
is worse than a crime. Morally and economically con¬ 
sidered as well as politically, if it was an expression 
of the intelligent sentiment of its members, which I 
apprehend it was not, it might justly be pronounced a 
• crime and blunder combined. 






















FINANCIAL RECORD. 

“WE NEED ONE THING BESIDES MORE MONEY, AND THAT IS BETTER MONEY.”— Senator Each. Chandler. 

VOL. I. FRIDAY, SEPTEMBER 11, 1874. NO. 32. 


Tlie Financial Record will be continued until further no¬ 
tice, and will be sent free of postage, to all persons who will re¬ 
mit 50 cents to the publishers. All editors who receive it are 
invited to send their papers in exchange. It will no longer bo 
published by the American Social Science Association, 
but for the present, as heretofore, communications respecting 
it may be addressed to the Secretary of the Association, F. B. 
Sanborn, No. 5 Pemberton Square, (Room 21,) Boston; and all 
exchange papers, public documents, etc., may be forwarded to 
the same address. 


Financial Events and Possibilities. 

Two important speeches were made at the Colum¬ 
bus Convention of Ohio Republicans on the 2dinst., 
the first by Ex-Governor Noyes, the other by Senator 
Sherman. We mention the order because we think it 
significant. Governor Noyes’ address was, we be¬ 
lieve, delivered before the platform was adopted, that 
of Senator Sherman in the evening when the work 
was done. Both the speakers are politicians and both 
like to be on the popular side. Of the two Mr. Noyes 
is probably the bolder man, and yet on this occasion 
he made the more timid speech. On one point, how¬ 
ever, he was decided, namely, that there should be no 
increase of currency beyond the present volume. 
Governor Noyes is apparently deeply infected with 
some of the notions supposed to be peculiar to infla¬ 
tionists, but they are theoretical and harmless, except 
in so far as they lead one to suppose that specie pay¬ 
ments can be reached without contraction in some 
form, by “growing up to the currency.” But Gover¬ 
nor Noyes has reached the point where he holds that 
specie payments are desirable, and that any inflation 
makes resumption harder. There is but one logical 
step to the conclusion that what is desirable is worth 
a temporary sacrifice, and that the danger of a brief 
but sufficient success of the inflation policy is great 
enough to cause all who fear it to band together and 
put that danger at an end while there is time, in 
the only possible way: by contraction. 

Senator Sherman often speaks better than he votes. 
His address at Columbus, so far as it related to finan¬ 
cial questions, was almost beyond criticism. It was 
firm, clear and decided for an early return to the 
world’s currency. And he went beyond Governor 
Noyes in expressing a belief that in due time the Re¬ 
publicans would agree upon some “decided though 
moderate” measure to hasten the day of resumption. 
We are thankful for even this carefully qualified opin¬ 
ion, and still more for his welcome aspiration,—“Oh, 
for one step further to make these notes as good as 
gold, and it needs only courage to take it!” This 
marks a decided advance in the senator’s views. We 
trust his own courage will be equal to the occasion; 
but of this our past experience of the contrast be¬ 
tween his words and acts give us harrowing doubts. 

Mr. Kerr of Indiana, from whose speech on the ac¬ 
ceptance of his nomination to Congress we made some 
extracts at the time, has recanted some of Ills curren¬ 
cy views as then expressed, in a more recent speech. 
Mr. Kerr is having difficulty from members of his own 
party, who have charged that he was really support¬ 
ing the “Wall Street interest.” He now says that he 
is in favor of paying all the five-twenties in green¬ 
backs. He is not in favor of an early resumption of 
specie payments, and doubts whether it can be at¬ 
tempted in ten years. The accusation that he wants 
to contract the currency is “a great big able-bodied 
lie.” To be sure Mr. Kerr adds that he wants better 
money, but as every positive or negative principle he 
advocates, leads directly to worse money, the declara¬ 
tion is as worthless and absurd as those of his Repub¬ 
lican opponents in Indiana. The fact is that both 
parties in that State are truckling to ignorant and dis¬ 
honest opinions supposed to exist among the voters. 


We are very sorry to see so good a man a* Mr. Kerr 
doing this. 

A curious question of party obligation may arise 
in the next Congress, should certain members of the 
present House of Representatives be re-elected. The 
Ohio Republicans, to take them only as an example, 
have called for measures to restore the specie stan¬ 
dard. At the last session ten Republican members 
from Ohio voted for the inflation bill which was vetoed, 
and only three such opposed it. Suppose they should 
all be re-elected and another inflation bill should be 
before the House; would they vote for or against it ? 
On the one hand they might feel bound by the aggre¬ 
gate vote of the party in their State, to change their 
position. On the other they might regard their re-elec¬ 
tion as a “vindication” and an approval of their course. 
Possibly some shrewd members might quiet their con¬ 
sciences by persuading themselves that the way to re¬ 
sume was to inflate. It will be interesting to notice 
how members who have received instructions from 
their constituents during the recess will act at the 


Spirit of tlie Press. 

[Detroit Evening News.] 

Nearly every platform adopted this year contains 
a provision in favor of specie payment “as soon as the 
business interests of the country will permit.” It is 
not difficult to show that that time is now. Thus: The 
Secretary of the treasury advertises to sell three mil¬ 
lions of gold this month. This is the operation which 
we have often criticized where the government shaves 
its own notes—a disgraceful proceeding, and one to 
bring the blush to the cheek of commercial honor. 
But if the secretary were to employ this three millions 
in paying greenbacks at their face , and from month to 
month were to use his gold surplus in the same way, 
we are very confident, not only that this particular 
method of specie resumption would be maintained 
without detriment to the business interests of the coun¬ 
try, but that these interests would be manifestly gain¬ 
ers thereby. Specie payments at the rate of three 
millions a month is, perhaps, not an ambitious per¬ 
formance, but the country is in no shape to put on 
style over its debts. Like an embarrassed but honest 
debtor, if it can’t pay all its floating obligations at 
once, its duty is to pay them gradually as rapidly as 
possible, and this plan, patiently pursued as a perma¬ 
nent policy, will be found to have a wholesome effect 
on the national credit. 


coming session. 


The Treasury department has adopted a practice 


which has often been urged upon it, and which gives 
the country some most useful information. The ex¬ 
penditures of Government, are now published month¬ 
ly. The return for August shows that warrants were 
issued for §18,200,000, the pension payments having 
been large. A comparison with the same time last 
year, is not practicable, inasmuch as the return is a 
new one, but we can give something of an idea of the 
state of the case, by a comparison of the returns for 


July and August with the first quarter of the year 


1873-74. The debt account is wholly omitted: 


Two months 187!. 

Civil and Miscellaneous. §13,472,158 

War.,.'. 8,183,012 

Navy. 5,502,723 

Indians and Pensions... 7,5 6,097 


Three months 1873. 
§17,372,294 
13,795,053 
9,792,452 
10,706,872 


Total.§34,714,590 $51,666,671 

It will be noticed that the saving is chiefly in the 
two departments of war and navy. Civil expenses 
bid fair to exceed the same item as in last year’s ac¬ 
count, and there is to be no economy in the bureaus 
of the interior department. 


The bank statements of three leading monetary cities 
of New York, Boston and Philadelphia all exhibit a 
considerable loss of reserve and of legal tenders. The 
New York banks lost nearly a million and a half of re¬ 
serve, those of Philadelphia §9C0,0)0, and of Boston 
§700,000. As we have previously remarked we are to 
expect this tendency to continue for several weeks 
yet. It is satisfactory to remember, however, that this 
money goes to the West where it is used for the pur¬ 
chase of grain, that it passes into the hands of farmers 
and is employed by them in paying their debts, and 
that in due time it will return to the banks in the form 
of deposits available for loans in business enterprises. 
It is reported from the West that the present move¬ 
ment in that section is one of liquidation. This is not 
only a good thing in itself, but it will perhaps operate 
to make the specie payments party stronger. Politi¬ 
cal economy assumes the selfishness of every man. 
So far as this principle is true the general payment of 
debts removes the reason for the hostility of the class 
of men who have been debtors to an improvement of 
the currency. It is incredible that a farmer who has 
five thousand bushels of wheat to sell, and owes noth¬ 
ing, should be opposed to specie payments. As we 
feel very confident that the cause we advocate is to 
triumph we can give no better advice to debtors than 
to clear off their debts when they can. The shock to 
them and the country, of the process of resumption 
will be far less if they do so. 


[Louisville (Ky.) Commercial.] 

The Republicans of the Northwest are getting under 
control the inflation nonsense that was troubling some 
of them, and every State convention in that section 
puts out a platform more unmistakably in favor of 
the decent policy of hard money and an honest pay¬ 
ment of the public debt, than the one which preceded 
it. The Republican national platform in 1876, as in 
1872 and 1868, will be for a return to specie payments 
as soon as possible, against all repudiation, under 
whatever specious guise it may come; and the action 
of the Republican national administration will be in 
the meantime, as it has been in the past, in accord 
with those declarations. 

[Chicago Tribune.] 

The Missouri Democracy has been heard. Its voice 
is the same which was lately raised in Ohio, Indiana-, 
and Tennessee; and a very nasty, thick voice it is. It 
is a cry for the payment of bonds in greenbacks. The 
Convention denied the right of the Government to 
issue currency; but held that, since the wrong had 
been committed, it would be wise to do a little cheat¬ 
ing for the benefit of the poor laboring man. This is 
as low a code of principles as a convention of thieves 
could desire. 

[St. Louis Globe.] 

The Missouri Democrats put themselves into the at¬ 
titude of saying to the Republicans, “We do not con¬ 
cede the right of the government to issue and maintain 
a paper currency, but you do; while we insist on the 
right of the government to substitute its illegal paper 
currency for those bank notes which we admit to be 
perfectly legal, and this you object to. What we pro¬ 
pose is, that you shall issue and maintain.the paper 
currency, against our opposition, and we will issue 
more of it to be substituted for the bank notes, against 
your opposition.” This would put the financial man¬ 
agement of the country in about the same condition as 
that trading schooner which the two men held in part¬ 
nership, one being in command at the bow and the 
other at the stern; it was not a financial success, owing 
to the tendency of the skipper at the bow to drop his 
anchor whenever the skipper at the stern did not steer 
to suit him. The Democracy seem to have lost the 
power of even pretending to be honest, and no com¬ 
mittee can get together to draw up resolutions, without 
both juggling with the meaning of words and palter¬ 
ing with those pledges and purposes which are the 
mere axioms and bases of honesty; and they go be¬ 
fore a people who are willing to pay their honest debts 
and redeem their pledges, and fancy that the whole 
world is willing to become an accomplice in the blind¬ 
ness which cannot discern honesty, and in the weak¬ 
ness which fears to try to follow it. 

[Cincinnati Enquirer.] 

It is foolishness to assert that there is any essential 
difference of opinion in the Democratic party West 
touching the question of currency. Indiana Demo¬ 
crats adopt an expansion platform. Ohio Democrats, 
with greater deliberateness, on broader grounds, and 
in unmistakable terms, demand a constant increase of 
the currency, to keep pace with the business of the 
country. The Missouri Democratic platform is almost 
a copy of the resolutions of the Ohio Democracy. 
Illinois must be counted out in any survey of the West 
with a view to getting the sentiment of the people 
upon this currency question. There has been no ex- 






























107 


THE FINANCIAL RECORD. 


pression from the Democratic party in Illinois. The | 
people of the party have not had voice in this matter 
equal to the sound of a pin dropping on the snow, 
save through the Grangers, largely composed of Dem¬ 
ocrats, who made such pronounced declarations in favor 
of an increase of currency. 

[N. Y. Independent.] 

Is there any good reason why, if the Government 
cannot now pay its legal tender notes in gold, it should 
not make them exchangeable for a bond that is at least 
par in gold, and thus restore to them the property 
which they originally possessed and which should nev¬ 
er have been taken away ? None whatever. If the 
Government cannot now pay this debt in coin, it is but 
fair and right that it should allow its creditors to con¬ 
vert it into a bond that will be to them the equivalent 
of gold. This will be just as cheap as to sell the bond 
and purchase the gold and with it pay the debt. If the 
surplus gold accruing from revenue is not sufficient 
for the purpose of redemption, then the Government 
must temporarily use its credit, either in purchasing 
gold by the sale of bonds or in exchanging bonds for 
legal-tender notes. It will come to this at last when¬ 
ever the Government really undertakes to pay the 
greenback debt. Either gold or its equivalent must be 
given for that debt. 

[Chicago Tribune.] 

Among the evils engendered by an irredeemable cur¬ 
rency, not the least is an increase of pauperism. This 
result has been pointed out in a paper on pauperism in 
the city of New York, read on May 22, 1874, before the 
American Social Science Association. An irredeema¬ 
ble currency stimulates speculation, brings on finan¬ 
cial panics, the destruction of wealth; and, as this 
destruction must fall somewhere, it also brings on 
pauperism. The issue of our greenbacks led to spec¬ 
ulation, the speculation to unprofitable investment, 
unprofitable investment to the loss of wealth, the loss 
of wealth to the wholesale discharge of laborers, the 
wholesale discharge of laborers to pauperism. The 
people of Chicago have had proof enough of the rela¬ 
tion that subsists between panics and poverty. They 
do not yet forget the demonstrations of the working¬ 
men during the past winter. Not only have the work¬ 
ingmen themselves suffered,—their wives and children 
have suffered too. The extravagance of the rich, pro¬ 
duced directly by the over-issue of paper money, is too 
easily imitated on a small scale by the poor. Under the 
influence of this extravagance, the reserved means of 
support for times of deprivations is taken away. 

The Illinois Opposition Platform. 

We give below a few of the comments, brief or more 
extended, on the platform of the Democratic or oppo¬ 
sition convention at Springfield a fortnight ago. 

[From the Chicago Times.] 

There is no attempt in the Springfield platform to 
ride two horses. There is no facing both ways. 
There is no expression that admits of two constructions, 
or is of doubtful meaning. Every sentence is as clear 
as crystal, and not a word is calculated to mislead or 
deceive. With the exception of the first resolution, 
which was not at all improved by the changes made 
after it came from the hands of the committee, it is all 
that could be desired. It spurns repudiation in any 
form or guise. It gives no countenance to a currency 
based on “faith” or any other sort of moonshine. The 
currency plank of the platform was rather weakened 
by the changes made after it came from the hands of 
the committee. This will be plainly evident upon com¬ 
paring the original with the modified plank. It came 
from the committee as follows: 

“The restoration of gold and silver as the basis of 
the currency of the country; the speedy resumption of 
specie payments, and the payment of all national in¬ 
debtedness in the money recognized by the civilized 
world.” 

And it was modified by the convention so as to 
read: 

“The restoration of gold and silver as the basis of 
currency; the resumption of specie payments as soon 
as possible, without disaster to the business interests of 
the country, by steadily opposing inflation, and by the 
payment of the national indebtedness in the money of 
the civilized world.” 

“Speedy resumption” is better than resumption 
“as soon as possible, without disaster to the business 
interests of the country,” because it is more definite. 
And resumption “by steadily opposing inflation, and 
by the payment of the national indebtedness in the 
money of the civilized world,” may not mean resump¬ 
tion before the expiration of fifty years. The Times is 
fully persuaded that specie payments may be resumed 
in a year without disaster to any legitimate business 
interest. France has borne a contraction of fully one 
hundred millions within the short space of eight 
months, and her paper circulation has been fully re¬ 
stored to par, and yet her business interests have not 
suffered. If France can bear such contraction, after 
paying enormous sums to Germany, and at a time 
when taxes for the support of a great military establish¬ 
ment are oppressive, there is no good reason to doubt 
that we can bear an equal contraction now, when the 
public burdens, as compared with those of France, are 


light, and when many millions of paper are lying idle in 
the vaults of banks. We are not likely ever to resume 
so long as we keep talking about disaster as a necessary 
consequence of removing paper to make room for spe¬ 
cie. The only way is to put aside all croaking and 
take right hold courageously, and retire paper until it 
rises to par. To merely oppose inflation is not enough. 

If we stand still we shall be driven back. The only 
way to succeed is to go forward. To talk about re¬ 
sumption “by the payment of the national indebted¬ 
ness in the money of the civilized world,” is hardly 
worthy of a body of bold and progressive men, unless 
the phrase “national indebtedness” is meant to include 
greenbacks as well as bonds. It properly does include 
them, but it would have been much better to have so 
stated. We may go on paying off the bonds in coin 
until the last one is redeemed without advancing one 
step nearer to specie payments. The only way to 
move in that direction is to pay the circulating notes, 
either of the banks or the government, in the money 
of the civilized world. The truth of this may as well 
be recognized first as last. 

[From the Chicago Tribune.] 

The proceedings of the Springfield Convention show 
distinctly that but for the infusion of a new element 
into the councils of the party,—an element which still 
refuses to call itself Democratic,—the party in Illinois 
would have gone the same way as the party in Ohio— 
the same way as the party in Indiana had previously 
gone. 

The debate in the Convention was an able one, in 
which every thing involved in the question of the cur¬ 
rency was discussed. The only point of difference 
between the majority and minority was on the first 
proposition, the minority proposing to resume specie 
payments when the same may be done without injury 
to the business of the country, instead of the “speedy 
resumption” proposed by the majority. Mr. Harring¬ 
ton, of Kane, led off in support of the majority report, 
pointing out the fact that the omission of that part of 
the resolution of the majority in favor of payment of 
the national indebtedness in the money of the civilized 
world would be accepted as a purposed repudiation. 
Mr. Hunter followed, denouncing the majority report 
as proposing to establish one currency for the people 
and another for the bond-holders. The ablest speeches 
for the minority report were those by William J. Allen 
and J. M. Crebs, both ex-members of Congress, and 
for the majority by Col. Dan. Morrison and William 
II. Morrison. 

The friends of an honest currency and honest pay¬ 
ment of the public debt in the Democratic party may 
thank Gov. Palmer and Messrs. Hesing and Raster that 
their ship did not go on the reef of repudiation along 
with the*craft of Old Bill Allen and Dan Voorhees; 
and, if they come out with a majority in November, 
of which there is at least an even chance, they may 
thank the same pilots for their safety. They have 
finally, after much tribulation, given to the people of 
Illinois the only manly and square-toed declaration of 
truth that has been presented by any political organi¬ 
zation; and while this will not probably draw many 
Republican voters from their allegiance, it will enable 
the Democrats and their allies to go into the canvass 
with alacrity and elan, and, when election comes, to 
poll their full vote, while the other side will find a 
large assortment of blanks in the ballot-box when the 
jewels are counted. There is absolutely nothing to 
bring out the Republican vote this year, except the 
fortunes of individual candidates and the leg-work of 
office-holders. Their platform is a sham, and a cow¬ 
ardly sham. It suits neither inflationists nor the op¬ 
ponents of inflation. It is one of those things not worth 
fighting for, and hardly worth fighting against. 

The Opposition have something with which they 
can look honest folks straight in the eye, and, if need* 
be, face a frowning world; for, as Mr. W. R. Morrison 
said, if beaten on such a platform, they would not be 
disgraced. This is no small thing to say for the Dem¬ 
ocratic party. They have been accustomed to take 
defeat and disgrace out of the same pill-box, but they 
have only got to take one this time in any event. The 
allies they have secured will stand by them for this 
fight at least. If they had come short, by even a very 
little, of the platform they adopted, these allies would 
have scattered to the four winds. The latter have 
obtained all that they asked for, viz: an unequivocal 
demand for honest money and fair dealing with the 
nation’s creditors; and now it is to be presumed they 
will work with earnestness and fidelity to restore the 
State of Illinois to the position she ought never to 
have forfeited, as a Commonwealth having no leanings 
toward a swindling currency, and no compromise to 
offer to repudiators. 

[From the Inter Ocean.] 

The Committee on Platform quarreled fiercely over 
the resolutions prepared at the Sherman House, but 
finally a majority reported them without material 
alteration. The currency resolution reported by the 
majority was as follows: 

The restoration of gold and silver as the basis of the cur¬ 
rency of the country, the speedy resumption of specie payments, 
and the payment of all national indebtedness in the money 
recognized by the civilized world. 

The following minority report was submitted: 

The restoration of golfl and silver as the basis of the cur¬ 


rency, and the resumption of specie, payments at the earliest 
moment practicable, without any injury to the business and 
commercial interests of the country. 

The friends of these propositions disputed over 
them, the adherents of the majority report stigma¬ 
tizing the minority resolution as repudiation. Judge 
Edmonds said the adoption of the majority report 
would lose the party thousands of votes, for to resume 
specie payments immediately, as contemplated, by the 
resolution, was impossible. Colonel Morris virtually 
declared that the resolution did not mean immediate 
resumption, that, in fact, it did not mean what it said; 
that it meant nothing; in a word, that it was merely 
a platform upon which Democratic orators could go 
before the people and refute the charge that the Dem¬ 
ocratic party is pledged to repudiation.. The quarrel 
became violent, threatening the disruption of the con¬ 
vention when Mr. H. B. Miller, Treasurer of Cook 
County, moved to add to the minority report the fol¬ 
lowing: 

By- resisting any further inflation, and paying the obligations 
of the country in money recognized by the world. 

Mr. Hesing supported the amendment of his 
friend, declaring that the poor people of Germany 
had “bought American bonds, pledged by their breth¬ 
ren that they should be paid in gold.” The con¬ 
vention, however, paid no attention to the Cook Coun¬ 
ty chief, but promptly laid Mr. Miller’s amendment on 
the table. Various amendments were then submit¬ 
ted, upon which bitter dispute arose. Governor 
Palmer was in favor of the majority report, because 
it followed the language of the law. Mr. Morgan 
mildly suggested that embodying a law enacted by the 
Republican party in a Democratic platform was unnec¬ 
essary, if not ridiculous. But the Governor responded 
that the Democratic party had been charged with favor¬ 
ing repudiation, and that it was suspected that it would 
repeal the law if it had an opportunity. He wanted 
to have it written down in the platform that the men 
who make these charges are liars. Proving men liars 
by the declaration of a platform is a novel proceeding, 
and feeling that he had made an original proposition 
the champion turncoat of American politics solemnly 
uttered the'following pious and moral remark: “You 
will never do wrong if you trust God and do right by the peo¬ 
ple .” But as the convention apparently had no very 
ardent desire to do either the one thing or the other, 
it paid no heed to his pettifogging or his moralizing. 
What it did do was to adopt the minority report after 
it had been so amended as to be logically unsatisfac¬ 
tory to both wings of the convention. 

[From the Cincinnati Enquirer.] 

A so called State Central Committee, which had 
doubtful authority to act as a Committee at all, met 
at the Sherman House and did what no Central Com¬ 
mittee ever did before—made a platform in advance 
of the Convention and excluded from the Convention 
every body who didn’t agree with those doctrines, and 
invited everybody who did. No man is mad enough 
to say that a platform so infamously constructed rep¬ 
resents the sentiment of the party or the people. It 
was made by a little Committee, without the sem¬ 
blance of authority. It was made by Chicago, and 
Chicago lies at the mercy of Eastern capital. When 
some recalcitrant Democrats refused to submit to the 
usurpation, and called another Convention, they found 
themselves utterly, without organization, and bewil¬ 
dered audience. The party in the State without a 
press; shut out from all opportunity to express the 
opinions of the people; who shall say that a platform 
so constituted is the declaration of the Democratic 
party of a great State ? Chicago, the timid creature of 
Eastern capital, cowering beneath it like a flogged dog, 
will consent to know nothing that doesn’t accord with 
her views. She dared not risk her heresy with the 
people. In advance she ruled the Democrats out of 
the Convention and hard money men in. There was 
no organized opposition to this usurpation. 


Platforms made to Order. 

THE MISSOURI DEMOCRATS. 

Resolved, That the public debt be paid in exact ac¬ 
cordance with the contracts ivhereby it was created; 
that anything less would be repudiation, and that any¬ 
thing more would be an unjustifiable abuse of power 
by Congress, in the interest of the bondholders and to 
the detriment of every other class; that the 5-20 bonds 
authorized by the acts of February, 1862, and the suc¬ 
ceeding acts, are distinctly, by their terms, made pay¬ 
able in legal-tender notes or greenbacks; and that the 
act of March 18, I860, whereby Congress solemnly 
pledged the faith of the United States to a coin re¬ 
demption, was an utterly unjust and feeble usurpation 
of power. 

Resolved, That while not conceding the right of the 
Government to issue and maintain a national paper 
currency, if this policy is to be persisted in we favor a 
repeal of the National Banking law and the substitu¬ 
tion of greenbacks to the extent of the National Bank 
currency, thereby providing for an immediate corre¬ 
sponding redemption of our bonded indebtedness, and 
the saving of §24,000,000 of interest annually to an 
overtaxed people. 

Resolved, That the evils necessarily attendant upon 




























THE FINANCIAL RECORD. 


108 


an irredeemable paper currency should be removed by j 
a removal of the cause; and that, as the first, and, we 
believe, the only necessary step, to such a result, the 
legal-tender notes of the United States, in addition to 
being receivable in payment of all debts and demands 
of every kind due to the United States and to individ¬ 
uals, should also be made receivable for duties on im¬ 
ports. 

THE MISSOURI PEOPLE’S PARTY. 

Resolved, That any further contraction of the cur¬ 
rency would be detrimental to the producing classes, 
and oppose any step in that direction; they favor the 
speediest, most feasible and safe reduction and cancel¬ 
ation of the interest bearing debt, and the abolition of 
the monopoly features of our banking system, with as 
early a return to specie payment as can be affected 
without disaster. 

THE NEBRASKA REPUBLICANS. 

Resolved, That we earnestly desire that the credit of 
the country be firmly maintained, in order that the 
commercial and industrial interests may not suffer, 
and we hope soon to see a circulating medium based 
on metallic currency. 

THE PENNSYLVANIA DEMOCRATS. 

Resolved, That a steady effort should be made to 
bring the Government notes to par with gold, and to 
secure a return to specie payment at the earliest possi¬ 
ble period that resumption can be effected with safety. 

THE NEW JERSEY REPUBLICANS. * 

Resolved, That we are in favor of such national leg¬ 
islation as will maintain inflexibly the faith of the 
Government to its creditors, and secure the speedy re¬ 
sumption of specie payments. 


Our Loss of Gold. 

The following statistics in regard to the stock of 
gold in the country will be found interesting. The 
figures represent the average amount held in the 
Treasury for the past eight month*, and for each half 
of the preceding five years. No calculation is made 
for the small amount held outside the Treasury, and 
this, as has been demonstrated, is too small to materi¬ 
ally vary the figures. It is proper to say that the 
stock in circulation on the Pacific coast is not repre¬ 
sented, although what is held in the treasury office at 
San Francisco is taken into the account: 


Coin certi- Coin 
Coin in ficatesout- owned by 
8 months ending Treasury. standing. Treasury. 

Aug. 1, 1874. S 83,600,000 §34,000,000 §49,500,000 

6 months ending 

Dec. 1, 1873 . 83,500,000 36,300,000 47,200,000 

June 1, 1873 . 70,700,000 25,100,000 45,600,000 

Dec. 1, 1872. 76,200,000 26,800,000 40,400,000 

June 1, 1872. 92,300,000 30,900,000 61,400,000 

Dec. 1, 1871. 93,000,000 19,000,000 74,000,000 

June 1, 1871. 102,000,000 25,100,000 76,900,000 

Dec. 1, 1870.. 100,800,000 26,000,000 74,800,000 

June 1, 1870 . 106,800,000 40,500,000 66,300,000 

Dec. 1, 1869. 107,600,000 30,100,000 77,500,000 

June 1, 1869. 100,600,000 25,000,000 75,600,000 


The New York Evening Post thinks that “these fig¬ 
ures illustrate the folly of the gold-selling policy pur¬ 
sued by the Treasury so far as specie payments are 
coucerned. A good part of the gold sold by the 
Treasury has been for the purpose of getting the 
means wherewith to buy bonds not due, this having 
been one of the bright ideas of the Boutwell school of 
financiers. The Treasury now owns §27,500,000 less 
gold than it did December 1, 1869, and is, by reason 
of the Treasury policy, that much further from specie 
payments.” 

How to Resume Specie Payments. 

Ex-Secretary McCulloch’s Plan. 

In a recent letter addressed to some gentleman at Cin¬ 
cinnati who invited him to address them on the currency 
question, Mr. McCulloch, who preceded Mr. Boutwell 
in the Treasury department, has given utterance to the 
sound opinions he has always been known to entertain, 
lie says: 

My opinions on the subject of the currency are well 
known by those who took the trouble to read my Fort 
AYayne speech, and my reports as Secretary of the 
Treasury from 1865 to i860. The opinions I then ex¬ 
pressed/ in language as strong and unequivocal as I 
could command, have neither been changed nor modi¬ 
fied. On the contrary they have been confirmed and 
strengthened by further observation and reflection. 
I thought it to' be the duty of Congress, considering 
the subject in its moral as well as its financial bear¬ 
ings, to adopt decisive and effective measures to bring 
about specie payments, and that the time for the adop¬ 
tion of these measures was at the close of the war. I 
did not think that “the way to prepare to resume spe¬ 
cie payment was to resume,” but I did think it of vital 
importance to the best interests of the country that 
the restoration of the specie standard should be the 
end and aim of all legislation bearing upon the subject 
of the currency. 


THE WAY TO RESUME. 

My conviction was clear and decided that this could 
only be effected—within any reasonable time, and be¬ 
fore such financial disaster as has recently occurred 
would overwhelm the country—by retiring so much 
of the paper currency in circulation as would be neces¬ 
sary to bring up the residue to par. I thought that 
this could be accomplished without the occurrence of 
the apprehended disaster to the business of the coun¬ 
try, and without affecting in the least the real value 
of property; that, by a curtailment of the amount of 
inconvertible notes in circulation, the purchasing or 
measuring power of the remainder would be propor¬ 
tionately increased, and that consequently the amount 
of real money in circulation would not be thereby di¬ 
minished; that measuring property by a false stan¬ 
dard could not add to its value, nor by any true 
standard reduce it. There was, it seemed to me, but 
one class, in the community, the debtor class, who 
could be benefited by a depreciated currency, and I 
was anxious that decided action for relieving the 
country of such a currency should be taken immedi¬ 
ately after the close of the war, when individual in¬ 
debtedness was less than it had been for many years. 
It seemed to me, also, that the injury to this class 
from a reduction, and consequent improvement, of the 
currency, would be altogether less than was feared by 
them; that what honest and energetic debtors needed 
was not legislation to enable them to pay their debts in a 
depreciated currency, but legislation that would give 
activity to well directed, not speculative, enterprise, 
and stability to business; that as, in fact, one debt is, 
in the course of trade, usually paid by the creation of an¬ 
other, and the general indebtedness of the people is not 
ordinarily, from year to year, materially reduced, the 
debtor class itself was in no serious danger of being 
injured by the elevation of the standard of values, and 
that if debtors were to be injured by it, the injury 
would be small in comparison with that which had 
been inflicted upon the creditors through the Legal 
Tender acts, which compelled them to receive, in sat¬ 
isfaction of existing contracts, a currency of far less 
value than that which was the only lawful money at 
the time they were made, and who generally bore their 
losses without murmuring, as a sacrifice required by 
the Government in its struggles with a gigantic rebel¬ 
lion. 

3IISCIIIEFS OF IRREDEEMABLE PAPER MONEY. 

At that time, in language which made up by explic¬ 
itness what it may have lacked in strength, I pointed 
out the danger and the immoral influences of an incon¬ 
vertible and depreciated currency. By every argument 
I could make, and every illustration I could bring to 
bear upon the subject, I endeavored to prove in each 
of my reports that a depreciated currency was, and 
never could be anything else than, a positive, unmis¬ 
takable injury to the people, morally and financially; 
that in regard to such a currency there could be no 
“stand-still-until-the-country-grows-up-to-it” policy; 
that by wise legislation we should move toward specie 
payments, or by unwise laws, or by drifting without 
chart or compass, we should find ourselves upon finan¬ 
cial breakers before we were conscious of immediate 
danger. In my earliest utterances upon the financial 
question, in a free talk with my Fort AYayne friends, 
I remarked “that, while I regarded an exclusive metal¬ 
lic currency among an enterprising and commercial 
people, an impracticable thing, I regarded an irredeem¬ 
able paper currency as an evil, which extreme cir¬ 
cumstances for a season might render a necessity, but 
which should never be sustained as a policy; that the 
legal tender notes were issued as a war measure, 
and, as the war had been brought to a successful ter¬ 
mination, measures should be taken for retiring these 
notes altogether, or bringing them up to the specie 
standard; that I had no faith in prosperity that was 
based upon depreciated paper money, and that I saw 
no safe path to tread but that which led to specie pay¬ 
ments; that the extremely high prices prevailing in the 
United States were an unerring indication that we 
were measuring property by a false standard; that the 
United States were becoming the best country in the 
world for foreigners to sell in, and the worst to buy in; 
that the longer inflation continued the more difficult 
would it be to get it back to the solid ground of specie 
payments; that if Congress should early in the ap¬ 
proaching session (1865-6), authorize the funding of 
the legal tender notes, and the work of reduction 
should be commenced and carried on resolutely, but 
carefully and prudently, we should reach the solid 
ground without serious embarrassment to legitimate 
business. If not, we might have a brief period of hol¬ 
low and seductive prosperity, resulting in widespread 
bankruptcy and disaster.” Such were my sentiments 
then and such are they now. The truth is, gentlemen, 
and the reiteration of it ought not to be necessary, gold 
and silver are the only standards of value, and as long 
as we are a part of the. great family of nations and 
are a commercial people, we can adopt no inferior 
standard without being greatly the loser by it. 

WHAT IS THOUGHT OF US ABROAD. 

None but bankrupt nations, with the exception of 
the United States, keep in circulation an irredeemable 
paper currency—a currency which in their cases tends 
to produce and perpetuate the poverty it indicates. 


To the United States such a currency is utterly dis¬ 
reputable, since there is not the slightest necessity for 
it. That a nation so rich as ours, so grand in its re¬ 
sources, so vast in its productions, a nation which has 
challenged the admiration of the civilized world by 
the rapid reduction of its public debt, commencing 
that reduction at the close of a Avar the most expensive 
that has ever been carried on, and actually reducing 
its indebtedness at the rate of nearly §100,000,000 a 
year, that such a nation should for so long a period 
maintain a depreciated circulating medium,made laiv- 
ful money by statute, is to intelligent foreigners an in¬ 
explicable mystery. The specie standard ought to 
have been restored before now, and I belieye it would 
have been if that great power in the land, the press, 
had given the doctrines enunciated from the Treasury 
Department from 1865 to 1869 the hearty endorsement 
it lias given to similar doctrines Avhen proclaimed by 
the President in 1874. If the financial trouble that 
has come upon us and the consequent prostration of 
the business in nearly all branches of trade, notwith¬ 
standing the plentifulness of currency, shall tend to 
correct the public sentiment in regard to the nature 
and offices of money, they will not be entirely Avithout 
compensation. It required the sacrifice of a great war 
to uproot slavery; perhaps it required the experience 
of a great financial disaster to teach the people the 
danger of discarding the true measure of value, and 
substituting therefor the uncertain fluctuating standard 
of irredeemable legal tender notes. 

CONGRESS ALONE IIAS THE POWER TO RESUME. 

It Avill be lamentable, indeed, if, instead of having 
profited by experience—our financial trouble, the re¬ 
sult of our financial mistakes—Ave shall cause a still 
Avider departure from the paths of wisdom and safety. 
Ileal money—and the world ahvays has had, and ever 
Avill have, plenty of it for legitimate uses—leaves or 
avoids countries that have an inferior substitute for it, 
no matter Avhat other standard may be adopted by laAV 
or how the fact may be attempted to be disguised, for 
the value of all property is still regulated by it. The 
Legal Tender act compels the people of the United 
States to treat the greenback dollar as if it were a dol¬ 
lar in fact; but, except in payment of debts, it is not 
one. It has not the purchasing poAver of one. Its 
value has been forty-five cents; it is noAv ninety; a 
year hence it may be ninety-five or Avhat it may be no 
man can tell. It is the paper dollar, not the gold dol¬ 
lar, that fluctuates, and is, therefore, an uncertain and 
dangerous standard. Can it then be doubted that it is 
the duty of Congress so to legislate as to make as soon 
as practicable, the paper dollar, of which it authorizes 
the issue, equal to the gold one ? The question then 
arises, Avhat legislation is required to effect this most 
desirable result ? Our new Secretary is a gentleman 
of ability, and he belongs to a State in Avhich good 
financial seed was soAvn at an early day, as has been 
proved by her high financial credit and the soundness 
of her banking institutions. I know not Avhat his views 
are, but he would not be a true scion of Kentucky 
stock if he were unsound upon the financial question. 
If the management of our finances were in his hands 
I for one should be Avilling to take him upon trust, not 
doubting that he Avould pursue the right course to re¬ 
lieve the country from the burden—for so it is—-of an 
irredeemable currency. But such is not the fact. 
His hands are tied. Congress is to determine Avhat 
shall be our financial policy, and this determination 
may depend on the result of the approaching election's. 

As parties now stand, the financial question cannot 
be made a strictly party question, nor Avill it be—as 
in the latter part of the late session it AVas feared 
might be the case—a sectional one. It is a question 
upon which there will be differences of opinion among 
men of the same party and the same State. 

MR. MCCULLOCH’S PLAN FOR RESUMPTION. 

That there should be speedy legislation and a definite 
policy established, every one avIio is not a gambler in 
business admits and desires. Nothing but further 
inflation can be Avorse than uncertainty upon a mat¬ 
ter so important to the Avell-being of the country as 
the currency. It is for these reasons that I noAv feel 
at liberty to give my opinion upon the financial legis¬ 
lation that is required. I state my AfleAVS frankly, not 
as presenting the only way, but as that which seems 
to me the most certain and direct path for reaching 
specie payments. If a wiser plan shall be adopted, 
no one Avill be more pleased than myself. 

First—C ongress should fix a period, say the 1st of Decem¬ 
ber, 1876—the time is not material if it be not remote—after 
which United States notes should cease to be a legal tender. 

Second —The Secretary of the Treasury should he author¬ 
ized to retire (by the use of the surplus revenue, and, if this 
should be insufficient, by the sale of bonds) at least §50,000,000 
of United States notes, per annum, until all have been retired, 
and he shall be prohibited from reissuing the notes thus re¬ 
tired, under any pretext or circumstances whatever. 

Third— In lieu of the United States notes retired an equal 
amouut of bank notes, if they should be required, should be is¬ 
sued to National banks. 

Fourth —When the specie standard has been re-established 
by the repeal of the Legal Tender acts, banking should be 
made free, and Congress should cease to interfere with the 
currency, except so far as may be necessary to prevent illegal 
issues, and to provide that every dollar iu circulation by 
authority of law shall be secured beyond contingency, as is 
now the case, by a deposit of United States bonds in the Treas- 
! ury. 





























109 


THE FINANCIAL BECOBD. 


THE PLAN EXPLAINED. 

It is obvious that so long as the United States notes 
are a legal tender, the specie standard will not be re¬ 
stored. These notes should be gradually retired, be¬ 
cause until the volume is reduced they will not per¬ 
manently improve in value, and because, until the 
banks perceive that the reduction is actually taking 
place, they will make no effort to supply themselves 
with coin for the protection of their own circulation. 
It will be safe to provide for an issue of notes for sup¬ 
plying the place of United States notes as they may 
be retired, because the bank notes will not be applied 
for, if the business of the country does not require 
them, and because they ought to be furnished if it 
does. It is not likely that an issue of bank notes, cor¬ 
responding to the amount of United States notes with¬ 
drawn, will be required, as the value of both kinds of 
our paper money will be steadily increasing, and spe¬ 
cie will be taking the place of paper as a reserve of the 
banks, and ultimately, as a circulation among the 
people. This will be a self-regulating matter. As 
the United States notes are retired, the banks will for¬ 
tify themselves with coin, so that when the time of 
coin redemption comes round, they will be prepared 
to meet the calls which may be made upon them, but 
which cannot be large, as the preparation for this 
state of things will have brought the business of the 
country into a healthy condition, and there will be 
little demand for coin for exportation. Nor will this 
withdrawal of United States notes preparatory to a re¬ 
turn to specie payments, nor the return itself, affect 
the value of property or disturb business. 

THE REPUDIATING DEMOCRATS. 

There is another subject to which I should not al¬ 
lude, if there was not a “plank" in the “platform” 
adopted by the recent Democratic Convention at In¬ 
dianapolis in favor of the payment of five-twenty 
bonds in greenbacks. Although it is known that party 
platforms are usually made to be disregarded and 
“spit upon,” the expression of such a sentiment by an 
intelligent and highly respectable body of men, claim¬ 
ing to represent a great political party, whose record 
upon financial questions has been most creditable, is 
calculated to mislead well-meaning people, if not to 
damage the National credit. This subject is rapidly 
losing its interest in a pecuniary point of view, by the 
fact that the six per cent, five-twenties are being rap¬ 
idly converted into five per cents, which, in order to 
prevent any question in regard to the currency in 
which they are to be paid, are on their face made 
payable in coin. Still, presented as the resolution has 
been for the consideration of the voters of Indiana, it 
is not without importance. I feel it to be important 
because it affects the good name of my own State. 
That such a proposition should be revived by men 
claiming to represent democracy indicates a want of 
political sagacity on their part and an abandonment 
by them of principles to which the Democratic party, 
in the palmy days of its greatness and power, conscien¬ 
tiously adhered, and which it must again avow and 
adhere to if it is to become the party of the future as it 
has been of the past. If this resolution of the Con¬ 
vention truly expresses or reflects the sentiment of the 
democracy of Indiana it is to be hoped that the spirits 
of Jefferson and Jackson, of Benton and Wright, and 
the host of other Democratic worthies whose fame is 
the nation’s pride, do not witness the apostacy of 
those who claim to be their followers. That the five- 
twenty bonds should not and cannot be paid in depre¬ 
ciated greenbacks is evident, for the following rea¬ 
sons : 

First.— These bonds are National obligations, intended to be 
circulated and held in foreign countries as well as in the Unit¬ 
ed States, and all such obligations are always understood to 
be payable in the currency which alone is recognized as money 
by the common consent of the great family of nations. 

Second.— They cannot be paid in greenbacks, because it 
could not be done without increasing the issue of legal tender 
notes beyond 8400,000,000 ; and a large portion of these bonds 
were issued after the faith of the Government had been pledg¬ 
ed by act of Congress that this should be the limit, and also 
because Congress by a special act, in 1809, declared that these 
bonds were payable in coin. • 

Third. —Because it was the express understanding between 
the Government and the people when these bonds were issued 
that the principal as well as the interest should be paid in coin. 

The language of the Indiana resolution, “We are in 
favor of the redemption of the five-twenty bonds in 
greenbacks, according to the law under which they 
were issued,” if not positively untrue, is calculated to 
mislead. That these bonds should be payed in green¬ 
backs is not in accordance with the law under which 
the issue was made. The reverse is the fact. It is 
true that the law does not expressly state that they 
are payable in coin, but it is provided that the interest 
be so paid. If it is silent in regard to the principal it 
is because no one at that time regarded the United 
States notes as anything else than a temporary cur¬ 
rency, which was to be redeemed or retired by conver¬ 
sion into bonds long before the bonds by their terms 
would be brought under the control of the Govern¬ 
ment. Who, in fact, ever heard of a National obliga¬ 
tion the interest on which was payable in one kind of 
currency and the principal in another and depreciated 
kind ? and what would be thought of a people who 
should take advantage of the technical construction of 
their own law and compel the holders of their bonds to 


take in payment their own dishonored paper, notwith¬ 
standing their servants in the Treasury Department, 
their servants who solicited subscriptions and the pub¬ 
lic press, with the full knowledge and approval of the 
law-making power, had represented the principal as 
well as the interest of the bonds to be payable in coin ? 
By every member of the House and of the Senate who 
participated in the debate when the subject of the is¬ 
sue of these bonds was under consideration, and who 
in terms alluded to them, they were spoken of as “gold 
bonds.” To repudiate all these promises now to the 
people of the United States would reach a depth of deg¬ 
radation and dishonor to which no nation has yet de¬ 
scended. The statement of the proposition, stripped 
of all its disguises, is enough to condemn it in the esti¬ 
mation of all honorable men. It is not, I am sure, in 
harmony with the sentiments of a majority of the 
Democrats of Indiana. As a bid for votes the resolu¬ 
tion of the Convention was a blunder, which in politics 
is worse than a crime. Morally and economically con¬ 
sidered as well as politically, if it was an expression 
of the intelligent sentiment of its members, which I 
apprehend it was not, it might justly be pronounced a 
crime and blunder combined. 

contraction not to be dreaded. 

Some intelligent men, who are anxious to stand 
again upon solid ground, are apt to speak of the 
“shrinkage” which must occur before this can be 
brought about, not reflecting that the real value of 
property is not affected by the standard by which it 
is estimated. Property is not dependent for its value 
upon a fiction. We speak of the price of gold, of its 
rise and fall, and some of us seem to think that we are 
richer as it rises and poorer as it falls, while its real 
value is permanent, except so far as it is effected by 
the yield of the mines. In spite of the Legal Tender 
acts it is to-day, and it must continue to be, the real 
measuring standard of property. There is no founda¬ 
tion, therefore, for the apprehension of a shrinkage 
in the value of property as a consequence of a return 
to specie payment; nor is there any more foundation 
for the apprehension that such a change in our finan¬ 
cial policy will make money scarcer and times harder. 
As I have already said, money, whether it be gold or 
paper, goes where it is wanted. The advocates in 
Congress of inflation, or an increase of the currency, 
were chiefly from the Western States. How truly 
they reflected the sentiments of that section I cannot 
say; but I am sure that what is needed in the West 
is not so much more money as better money, and 
greater and cheaper means for the transportation of 
its products to markets. 

WHAT THE WESTERN FARMER NEEDS. 

There is no class of men who are so much injured 
by irredeemable paper money as the agriculturists. 
It is the farmer especially who is cheated by fictitious 
money. It is said, I know, that he pays his taxes 
with it and for what he needs to purchase; but is it 
not true also that it increases his taxes and adds large¬ 
ly to the cost of what he buys ? The cotton, sugar and 
rice of the South, and the grain, beef and pork of the 
West are needed at home and by foreign nations, and 
these necessaries will always command money. The 
people who have them to dispose of must decide what 
kind of money it shall be—money in the form of brok¬ 
en promises or gold and silver and convertible bank 
notes. I have been for a long time absent from the 
country, but I am greatly deceived if the demand of 
the West for more currency does not come chiefly 
from those who have little or nothing to sell, and who 
would be consequently injured by a compliance with 
their demands. There may be at present depression 
m the price of agricultural products. But this is not 
owing to scarcity of money, but to a falling off in 
the demand. Consumption at home is less and the 
foreign demand is smaller than it has been. Many of 
our manufactories are idle, and European markets are 
disturbed by our financial troubles. It is these causes 
—that are only temporary—And not scarce money 
which occasions the depression that at present exists. 
There has never been a time when the products of the 
West (I can speak advisedly of this section) have 
failed to bring what they were really worth, accord¬ 
ing to prices at the home and foreign markets, for 
want of money to pay for them, and there never will 
be. I know that these products have commanded at 
various times extremely low prices, but this was ow¬ 
ing to the lack of means of transportation or of a 
supply superior to the demand. The fact that nine 
out of ten of those who have been engaged in buying 
and shipping the products of the West to the sea¬ 
board, where prices are usually regulated by the Eu¬ 
ropean markets, have failed in business, is an evidence 
that those products have not been sacrificed or sold at 
home for less than their value by reason of a scarcity 
of money. There need, then, be no apprehension on 
the part of the farmers of the West that they will be 
injured, or that there would be a scarcity of money, 
by reason of the withdrawal of the United States 
notes or a reduction of paper circulation. For every 
dollar of depreciated currency withdrawn they would 
have a dollar, in value, at least, or convertible paper 
or of specie. What is true in regard to farmers, is 
equally true in regard to manufacturers, merchants 
and laborers. 


THE BANK QUESTION. 

I am no advocate for banks. If they did not exist, 
I might regard the creation of them a question of 
doubtful expediency; but they are so interwoven with 
our finaucial interests that they could not be destroyed 
without a financial revolution. And it must be borne 
in mind, in considering our banking system, that it is 
a very different one from that it superseded, inasmuch 
as it gives to the people a circulation of uniform value 
and unquestionable solvency. It is undoubtedly the 
best system now in existence, and it should be sus¬ 
tained until a better one is devised, or until the coun¬ 
try is prepared to do without banks altogether. In 
what I have said in regard to the United States notes, 
I must not be understood as reflecting upon the finan¬ 
cial minister who advocated, or the Congress that au¬ 
thorized, the issue. In regard to the wisdom of this 
measure there are now, as there were then, differ¬ 
ences of opinion; but, admitting that this was not 
the wisest measure, the advocacy of it ought not 
to detract from the great merit of Mr. Chase, to 
whose administration of the Treasury the success¬ 
ful termination of the war is very largely to be 
attributed. If Mr. Chase lacked financial training 
and experience, he possessed what was better in the 
trying circumstances in which he was placed, courage, 
nerve, faith. Great victories in the field are but sel¬ 
dom won by a strict adherence to the scientific rules 
of^war. Great commanders are seldom found in dis¬ 
tinguished military engineers. The same is true in 
great financial contests, and the struggle for suprema¬ 
cy between the government and the Southern States 
was as much a contest of dollars as of arms. If the 
government had broken down financially the rebel¬ 
lion would not have been suppressed. That it did 
not break down was largely owing to the qualifica¬ 
tions of Mr. Chase for the position he held. He un¬ 
doubtedly made mistakes, but there is cause for won¬ 
der that lie did not make more. I do not believe there 
was another man in the Union who would have made 
less. 

AWAY WITH THE GREENBACKS! 

My own deliberate opinion is that we shall never 
have really cheap money, as we can never have reli¬ 
able money, until the United States notes are stripped 
of their false character, retired from circulation and 
their place supplied by specie and perfectly secured 
convertible banknotes. Specie, then, will cease to flow 
out of the country, as now it does, but will commence 
flowing in so soon as we drive out of circulation the notes 
which have deprived it of its monetary character. The 
products of our gold and silver mines now leave us be¬ 
cause we have no use for them. As the precious metals 
are not circulating mediums, nor bases for money, they 
would be a burden if retained. In regard to a substi¬ 
tution of bank notes for greenbacks, 1 have only to say 
that there ought not to be, and there will not. long be, 
two kinds of paper money in circulation. One kind 
or the other will occupy the field. This I think inevit¬ 
able. We shall get rid of United States notes, or there 
will be an irresistible demand for more of them. I 
advocate the substitution of bank notes for United 
States notes, because the latter stand in the way of a 
return to specie. The Government lacks the means 
and machinery to keep in circulation a convertible cur¬ 
rency of its own. To maintain such a currency, the 
Treasury Department, or a department to be created 
for the purpose, would necessarily become a bank of 
issue. Such a bank would be as unsuited to our insti¬ 
tutions as it would be deficient in the power required to 
give flexibility to its issues, and secure a joint and 
equal distribution of them throughout the country. 
For such an experiment we are not prepared. As long 
as we have a legal tender paper currency we shall have 
an inconvertible currency. I advocate the substitu¬ 
tion of banknotes for United States notes also, because 
I regard it of exceeding importance that the subject of 
the currency should be withdrawn from politics. Poli¬ 
ticians are necessarily agitators. They cannot be 
otherwise. They need capital, and agitation is their 
capital. That this capital should not be made by a 
perpetual interference with what affects every man’s 
interest is an obvious truth. A government currency, 
therefore, is not what is needed for a circulating me¬ 
dium. No political party should be entrusted with the 
power of making money—or what is called money— 
scarce or plentiful, at pleasure. Let the United States 
notes, then, be retired. Let such restraints upon bank 
circulation be removed. Let banking be free, and 
the business of banking be managed by those who em¬ 
bark in it. Let the circulation of the banks, secured 
by the bonds of the Government, be regulated by their 
ability to redeem, and by the requirements of the 
country, and we shall have that freedom from politi¬ 
cal interference, and that flexible, yet stable, because 
convertible, currency, which is needed to stimulate 
enterprise and secure to labor its proper reward. The 
loss that the people would sustain in the matter of in¬ 
terest by the withdrawal of the United States notes 
would not be felt. If this loss should not be made up 
by the taxes assessed upon the banks and the facilities 
which they render to business it would be small in 
comparison with what would be gained by the with¬ 
drawal of the currency question from the arena of 
politics. 










FINANCIAL RECORD. 

“"WE NEED ONE THING BESIDES MORE MONET, AND THAT IS BETTER MONEY .”—Senator Zaeh. Chandler. 


VOL. I. 


FRIDAY, SEPTEMBER 18, 1874. 


The Financial Record will be continued until further no¬ 
tice, and will be sent free of postage, to all persons who will re¬ 
mit 50 cents to the publishers. All editors who receive it are 
invited to send their papers in exchange. It will no longer be 
ublished by the American Social Science Association, 
. ut for the present, as heretofore, communications respecting 
it may be addressed to the Secretary of the Association, F. B 
Sanborn, No. 5 Pemberton Square, (Room 21,) Boston; and all 
exchange papers, public documents, etc., may be forwarded to 
the same address. 


Speeches of the Week. 

Two conspicuous politicians have made speeches dur¬ 
ing the last week, dealing largely with questions of 
currency and finance. General Butler and Mr. Pen¬ 
dleton are on opposite sides of the fence, but they have 
found a chink in it through which they can shake 
hands and exchange glances of dishonest approbation. 
It is a hopeful sign of the political times that both 
these men are discredited in their respective parties, 
and that neither has any chance of preferment. A 
summary of what they said is therefore all that is 
necessary. 

Mr. Pendleton drew a doleful picture of the conse¬ 
quences of contraction, eloquent, but silly. He told 
his hearers that everything would be reduced in price 
ten per cent, by specie payments. What of it ? If one 
needs only ninety per cent, as much money to pay his 
way, he is as well off as now if he receives only ninety 
per cent. Mr. Pendleton was shrewd enough not to 
say that anything would be reduced in value ten per 
cent. He s'aid he was in favor of preventing the cur¬ 
rency from continuing “the plaything of politics or 
the football of parties.” Very well; the only way to 
accomplish this is to restore specie payments so that 
parties may not be compelled to consider whether the 
currency needs to be “expanded” or contracted. After 
this follows a long recapitulation of the financial his¬ 
tory of the war, false in many particulars, and false in 
inference everywhere. Mr. Pendleton declares that he 
was always in favor of specie payments, but aside from 
the dangers of reaching that goal by contraction he 
does not believe the plan would be effectual. He 
thinks the contraction since the war a great financial 
blunder. And now he not only wants paper currency, 
but says, “Let it be as abundant as experience dictates 
to be necessary,” when the following described good 
time will come: 

“When the in lustry and wealth of the country 
shall be sufficiently developed they (greenbacks) will 
be at par with gold, and then specie payments will be 
resumed. In the meantime trade will flourish; work 
will be abundant; debts, private and public, will be 
paid; interest will be saved, and the great want of this 
new country—perhaps of every country—low interest 
—will be supplied. Accumulated capital, I know, 
produces low interest. So does abundant currency. 
At all events, abundant currency, actively employed, 
is the real parent of accumulated capital.” 

Then we have Mr. Butler, who spoke to his “friends 
and neighbors” of Gloucester, Mass., on Saturday 
evening last. Butler puts his financial absurdities so 
much more absurdly than we can do it, that we give 
him as far as we can the benefit of his own words. 
Apologizing—his whole speech was in the apologetic 
vein—for his construction of the legal tender act as 
authorizing the payment of the five-twenties in gold he 
said:—“And I believed the advantage of that con¬ 
struction to this country would be that it would pre¬ 
vent our bonds being taken up abroad, thereby oblig¬ 
ing us to send out large amounts of specie to pay in¬ 
terest abroad.” That is to say, since we wanted to 
borrow money to carry on our great enterprises, it would 
have been an advantage to prevent the foreigners from 
taking the bonds on which we pay but six per cent, 
interest, and to persuade them to take railroad bonds 
at seven and eight per cent. Needing to borrow, we 
should see that our credit is as low as we can make it! 
Returning to this topic, he again bewails the sending 
abroad of §100,000,000 a year in specie (greatly exag¬ 


gerated), to pay interest. This is silly again. Butler 
would not have specie payments. The country pro¬ 
duces gold which is of little use unless we employ it 
for currency. Who loses if we send it abroad ? Does 
Gen. Butler think we are injured by the exportation 
of our surplus coin ? He added mis-statement to ab¬ 
surdity, when he said that gold came within five 
per cent, of greenbacks after the panic, and that we 
are now five per cent, further from specie payments, 
both assertions being untrue. He declared that con¬ 
traction has raised the rate of interest in Massachu¬ 
setts—another fabrication. He attributed to the veto 
the stagnation of business, and to the failure of infla¬ 
tion the consequences of inflation. But worse than 
all, he basely admitted that he voted for measures he 
did not approve in order to avert the terrible conse¬ 
quence's of Western opposition to some of his pet 
schemes. And he thinks this magnificent log-rolling 
a recommendation rather than a disgrace. As a final 
absurdity we copy the following sentence: 

“A dollar of United States money at par passes 
from hand to hand, in exchange for all commodities, 
at the same value, over a larger extent of country, 
than the currency of any other in the world, not ex¬ 
cepting gold and silver, without deduction of ex¬ 
change.” 

If this were true, which it is not, it would only mean 
that we cover more territory than any other country. 
In the first place we have not the largest territory, 
being surpassed in that respect by Russia and China, 
and in the latter country at least the silver currency 
passes “at par” over a larger extent of territory than 
do greenbacks, which, by the way, in more than half 
the territory of the United States, do not pass current 
at par. 

We desire also to record the speech of Senator 
Schurz in support of the people’s movement in Mis¬ 
souri. Unlike most politicians, Mr. Schurz does not 
feel bound hand and foot by party declarations. He 
is in favor of the people’s reform movement in his 
State, but he has the courage to declare that he does 
not agree with its resolutions entirely. The press re¬ 
port of the speech gives the following summary of 
his utterances on the currency questions: 

Regarding the recommendations concerning nation¬ 
al questions, he said, it is not satisfactory to me, nei¬ 
ther is it discouraging: it is not consistent, neither 
does it preclude argument. If the people’s movement 
as to the financial question may be said to be on a 
fence, I among others shall make all honest efforts to 
keep it down, right side, and I am confident that the 
State of Thomas H. Benton will, in the end, not re¬ 
pudiate one of the most honorable and glorious of its 
traditions. 

There seems to be some difference between the 
view taken by Butler and Schurz of their obligations 
to party, and there will be but one opinion among 
honorable men which of the two takes the highest 
ground. 


Platforms of the Week. 

The party platforms lately constructed, have been 
important, and mark the progress of sound views on 
the currency all over the country, but especially in 
the West, where the inflationists claim to be an over¬ 
whelming majority. 

The Michigan “reform” Convention was held on the 
9tli, and pronounced plainly for “a speedy return to 
hard money as the only honest standard of values.” 
The Nebraska independents on the other hand, put a 
plank in their platform, “favoring a system of curren¬ 
cy, based on the credit of the nation, issued by the 
Government direct to the people, until a return to spe¬ 
cie payments is practicable.” The Liberals of New 
York not only pronounced for “the realization of a 
constitutional currency,” but added: 

“That the return of the country to a specie basis is 


NO. 33. 


an object of paramount importance; that as the great 
purpose of money is to serve as a medium of exchange, 
the national integrity demands a speedy return to the 
common standard of the world.” 

The reformers in the Second Wisconsin Congress 
district now represented by an inflationist, met on the 
10th inst., nominated Mr. A. G. Cook, and adopted a 
platform, of which Mr. Cook in accepting the nomina¬ 
tion, said: 

“I would say in regard to the financial plank, that 
it especially meets my approval. I was educated to 
believe that a specie currency was the constitutional 
currency of the country. If we have any other, it has 
grown out of the war, and is a war measure. It is 
time we should get back to the old ways. I will say 
right here, that if I should be elected to represent 
this Congressional District for two years, and if I could 
come back to my constituents with my last year’s 
pay in gold instead of in greenbacks, and find them 
receiving the same currency for their stock and wheat, 
I should feel that the two years had not been spent in 
vain.” 

Several Democratic platforms have been constructed, 
and with a single exception, they are strongly for hon¬ 
est money. The Nebraska Democrats followed the 
lead of Illinois as follows: 

“Resumption of gold and silver as the basis of cur¬ 
rency; resumption of specie payments as soon as pos¬ 
sible without disaster to the business interests of the 
country, by steadily opposing inflation, and by the pay¬ 
ment of the national indebtedness in the money of the 
civilized world.” 

The Michigan Democrats not only want specie pay¬ 
ments, but they set a time and bring forward a plan, de¬ 
manding “a repeal of the legal-tender act, to take effect 
not later than July!, 1876; a specie basis and free banks, 
with a secure currency, and the payment of all forms of 
the national debt in coin or its equivalent, whenever 
due.” The Massachusetts democracy resolved that 
the speedy resumption of specie payments is alike de¬ 
manded by honor, and recognized by all the civilized 
nations of the world, as the only sound and healthy basis 
of currency. The New Jersey Democrats on Tuesday 
of this week were not less decided in their demand for 
specie payments and national honor. A “Democratic 
Liberal” Convention held last week to nominate a can¬ 
didate for Congress in the second Minnesota district, 
now represented by an inflationist, called for a sound 
currency, “which must necessarily be placed on a spe¬ 
cie basis.” 

In the 19th Ohio district,the Democrats have nomina¬ 
ted Dr. D. B. Woods against Gen. Garfield, and the ac¬ 
tion of their convention was exceedingly significant as 
being in direct opposition to the Columbus platform of 
the party. These Western Reserve Democrats first 
declared for “a return to the currency of the Consti¬ 
tution (specie) at the earliest possible period, consis¬ 
tent with the business interests of the country,” and 
then clinched the nail by resolving, 

“That the Democracy of the District have the most 
implicit confidence in the ability, integrity, statesman¬ 
ship, and patriotism of our Senator in Congress, the 
Hon. Allen G. Thurman, and that we most heartily 
indorse his public acts generally, and especially his 
course upon the important subject of finance in the 
United States Senate.” 

Against this we may set the absurd resolution of 
the Hamilton County Democrats (Cincinnati) under 
Mr. Pendleton’s eye. 

“That the exigencies of the times and the business 
interests of the country demand an increase in volume 
of currency, and that they demand it now.” 

The Republican platform of Minnesota is not very 
decided, but its tendency is towards hard money and 
against inflation. The convention, in enumerating 
several things to which it “points with especial pride,” 
mentions “the preservation of a sound currency against 
ruinous inflation inspired by speculative interests, 
which may be hailed as sure guarantee of the earliest 
possible return to specie payments consistent with the 












Ill 


THE FINANCIAL BEOOBD. 


rights of both the debtor and creditor classes of our 
people.” And the net result of the platform-making 
last week is, two Reform State Conventions and one 
Reform Congress Convention favoring specie pay¬ 
ments ; one State Independent Convention for infla¬ 
tion: six State and two Congress Conventions of Dem¬ 
ocrats declaring explicitly for honest money, and 
one County Convention demanding more money; and 
one Western Republican State Convention blowing 
hot and cold, but rather giving the preference to hon¬ 
esty in dealing with the national creditors. On the 
whole,it is the most satisfactory week yet, and gives the 
strongest testimony to the growing strength of the 
specie payments party. 


Spirit of tbe Press. 

[New York Tribune.] 

Probably no two previous autumns have shown so 
great a difference in the local money market as seen 
between this fall and last. Just a year ago the 
demand for money was extremely active; in the 
open market money commanded 1 1-2 and 2 per cent, on 
good collaterals, and nobody could get accommodations 
at the banks except their regular cusetomrs; the de¬ 
mand from the country for currency to pay for the 
vast quantities of grain coming to market was simply 
immense, the New York banks had been drained of 
currency until they had got below their legal reserves, 
and had scarcely anything to put out except §500 bills, 
and the shipments of products to the East were so large 
that exchange on New York had ranged at §1.25 to 1.50 
per §1000 discount for several weeks. Yet this great 
activity and pressure of business created the most 
cheerful feelings in business circles, and to the great 
majority of observers the financial and commercial sky 
never looked brighter than it did a year ago. But the 
failure of Kenyon, Cox & Co., and several other New 
York firms, which occurred during the second week of 
September, were the premonitory cracklings which 
preceded the grand crash, in which all the flattering 
prospects of trade went down with the failure of Jay 
Cooke &Co., which was definitely announced on the 
19th of September. The contrast of the present situa¬ 
tion with that of a year ago is remarkable; money is 
superabundant, and though there is some increase in 
the demand, indicating a gradual revival of enterprise, 
loans are still to be had in the open market at 7 per 
cent., and even on extra good collaterals at 6 per cent, 
for sixty or ninety days. Deposites are still very 
large, and as the fall advances without developing 
any very active demand for money, as we hoped, 
bankers become more desirous of lending at low rates. 
The great difference in the fall business in this market 
this year as compared to last is, however, due to a 
smaller amount of grain being marketed. 

[Kalamazoo (Mich.) Telegraph.] 

Resumption does not mean, necessarily, contraction: 
but the substitution of good for a bad currency. If 
Mr. McCulloch’s plan should be adopted, we would 
have contraction if the business of the country did 
not require as much paper as we now have, and we 
would have expansion if it required more. The 
amount of paper out would be regulated simply by 
the demand, and would not be subjected to the inter¬ 
ference of crude legislation. The only effect, there¬ 
fore, of resumption would be to give us a currency 
having a fixed and certain value, and all the talk 
about shrinkage in values arising from the apprecia¬ 
tion of our paper, betrays no more wisdom than the 
argument that we should not pay our promissory 
notes because they are “battle-bornand blood-sealed.” 

[Traverse Bay (Mich.) Eagle.] 

The platform adopted by the Michigan Republican 
Convention is the weakest act performed by that 
body. It is remarkable only in avoiding strictly 
everything like a square declaration upon any one 
single live issue. A resolution in favor of the early 
resumption of specie payments was laid upon the ta¬ 
ble, and one that may be made to mean either inflation 
or contraction, adopted. Upon nearly all live issues 
the platform is as silent as the tomb. 

[Lansiug (Mich.) Kepublican.] 

The Chicago Tribune is always unfair in its com¬ 
ments on Michigan Republicanism. It says that “at 
the recent State Convention, the Ferry faction obtained 
control, and placed the party alongside the Democratic 
party in Ohio.” The Democratic party in Ohio resolv¬ 
ed in favor of paying the national debt in greenbacks, 
and at the same time increasing the issue of greenbacks. 
But the Republicans of Michigan “demand that in all 
financial legislation Congress should keep steadily in 
view the resumption of specie payments,” and render 
“the promises to pay of our Government equivalent 
to coin.” Instead of being “along side,” as the Tribune 
says, the Ohio Democrats and the Michigan Republi¬ 
cans are directly hostile, gun to gun and yard-arm to 
yard-arm. As to the Ferry faction controlling our 
State Convention, if there be any such faction, it can 
extract only cold comfort from the platform adopted. 


[Chicago Times.] 

While a repeal of the legal-tender act would not of 
itself bring us to specie payment, the-latter cannot be 
maintained without a repeal of the legal-tender act. 
The legal-tender greenbacks stand as an obstacle in the 
way of specie payment. They are non-interest-bear¬ 
ing promises to pay, and being legal-tender by virtue 
of an arbitrary war-statute, constitute a kind of false 
money of inferior character, whose effect is to drive out 
and keep out true money. The only way to bring true 
money (geld and silver) into their place permanently 
as a basis of the currency is to divest them of the sham- 
monev character, given them by legal-tender legisla¬ 
tion under the war-power. 


The Indiana Democrats. 

A correspondent of the Chicago Times , which is a 
consistent and aggressive hard-money paper, gives 
a more encouraging view of the financial opinions 
of the Indiana Democrats than we find elsewhere. 
He writes thus from Indianapolis on the first of Sep¬ 
tember : 

It is ridiculous to assert that there is anything like 
unanimity of sentiment among the democracy of 
Indiana on the financial future. At my pen’s end, 

I can give a brief list of persons acting with and for 
the democracy, who are heartily in sympathy with 
the Times on the great question of the hour—finance 
—viz: Hon. M. C. Kerr, .ex-M. C.; Hon. Wm. H. 
English, ex-M. C.; Hon. Joseph E. McDonald, chair¬ 
man of the Democratic state central committee, and 
strong candidate for United States senator; John Fish- 
back, editor and chief proprietor of The Indianapolis 
Sentinel; Hon. James B. Ryan, late treasurer of state, 
elected by democracy; Col. John A. Finch, lawyer 
and chairman of the Greeley Republican committee; 
The Logansport Pharos, leading democratic paper of 
the Wabash valley; Ligonier Democrat, edited by the 
live and eccentric Hon. John B. Stoll; whoiesale dry 
goods house of Murphy, Johnson & Co. of this cit}'. 
This list could be almost indefinitely extended. Hon. 
M. C. Kerr is, perhaps, the ablest champion of a 
hard-money basis of currency—of contraction as op¬ 
posed to inflation—of specie redemption for all circu¬ 
lating medium in contradistinction to that other non¬ 
descript theory of indefinite redemption, and an ex¬ 
panding and contracting currency. He has served a 
number of terms in Congress—ably, faithfully, and so 
far as I can learn, without a stain of corrupt jobbery 
on his fair fame. He has been a little bitter and monoto¬ 
nous, sometimes, in partisanship. That will leaden 
to a degree the most sparkling qualities; and the most 
luxurious in effectual development is jejune under its 
poisonous effects. But Mr. Kerr is conceded to be 
able and upright, and he is bold in his utterances on 
the currency problem. The Cincinnati Enquirer levels 
its most personal shafts directly at him, and charges 
that he is in the pay—at least the inte rest—of Wall 
Street bankers, and the Black Friday gold gamblers. 
Mr. Kerr goes straight forward, hardly deigning to 
reply to the fire along the line at him. A democrat, 
Maj. Cravens, is running against him for Congress; 
and Wolf, the incumbent, is fighting him on the 
stump. 

On all material points, the chairman of the Demo¬ 
cratic state central committee of Indiana and the 
Times are in accord on the great financial issue before 
the people. In a recent speech at Greencastle, Mr. 
McDonald said: 

“In the first place, it is clear to my mind that the 
normal condition of the finances of any commercial 
country should be a specie basis, because specie, in 
some manner, forms the standard of value in all com¬ 
mercial countries. If we had no trade or commerce 
with any foreign nation it would matter very little to 
us what we should adopt as a medium of exchange 
between ourselves. We are not only a commercial na¬ 
tion, but we are a commercial people, and therefore 
it becomes necessary to have for our standard of val¬ 
ues something that approximates the standard used 
in other countries.” 

He thus places himself squarely among the believers 
in a specie basis. After proceeding to give reasons why 
a commercial people, dealing with all parts of the 
civilized world, must of necessity have a currency 
convertible into the world’s currency, he admits that 
inasmuch as we have 800 millions of paper currency 
and but 140 millions of specie in the country, we can¬ 
not instantly jump to- a specie basis. He adds, “The 
national bank system w T as inaugurated during the war 
and for the purpose of furnishing a market for govern¬ 
ment bonds. It was not designed to be continuing, 
and the right of repeal was reserved in the act author¬ 
izing it. As a Democrat, I have ever looked upon 
such moneyed institutions, existing under the authori¬ 
ty of the federal government, as dangerous engines 
of political power, and do not feel willing to see the 
system perpetuated for any supposed advantage 
that might spring from it; and, therefore, I am anx¬ 
ious to see the national banks of this country in the 
I certain and sure process of liquidation, not in any 


violent way, as that would do harm, but under such a 
policy as would eventually accomplish the end. I 
have never been able to believe in the legality of the 
legal-tender clause of the law authorizing the issue of 
treasury notes, notwithstanding it has been so held by 
the Supreme Court. I cannot believe that Congress pos¬ 
sesses the power to coin money out of paper .” 

In conversation, Judge McDonald remarked to me: 
“Why, sir, I have not met a Democrat during the cam¬ 
paign who does not agree with me in my Greencastle 
speech. All of them say ‘it is right,’ ‘it is sound de¬ 
mocracy,’ but some fear that we can’t resume specie 
payments for years yet. To them I replied, ‘but we 
can keep specie payments and specie resumption stead¬ 
ily in view.’ They agree that we should. I am sat¬ 
isfied,” continued Mr. McDonald, “that the democra¬ 
cy of Northern Indiana are almost universally sound on 
the currency and financial questions.” 

Thus it is seen that the Indiana democracy do .not 
support its inflation platform, or do not interpret it to 
mean inflation and irredemability. Thousands of the 
strongest, ablest and best men of the part}' in the State 
cordially coincide in the views of the Times on that 
question. My impression is, the hard-money party in 
this State grows stronger day by day. 


The Michigan Republicans. 

Kalamazoo, Aug. 31, 1874. 

To the Editor of the Financial Record: 

I find in your issue of 28th inst. an error to which 
I call your attention. The minority report presented 
to the Michigan Republican State Convention was 
not adopted, as I have reason to know, having intro¬ 
duced the resolution, which is substantially as you 
publish it, though it has been somewhat mutilated in 
the course of transmission East. I meant to have the 
Convention adopt a platform advocating speedy re¬ 
sumption, and I especially wanted it to avoid the am¬ 
biguous expression “at the earliest day practicable.” 
It was the opinion of the delegates, however, that the 
question was a “delicate one,” that “Republicans were 
divided upon if,” and that “it would be impolitic to 
say anything very definite,” on account of the “har¬ 
mony of the party,” etc., etc., etc. This sort of talk 
was indulged in, "both in the committee room and on 
the floor, and it was undoubtedly - tbe sense of the 
Convention that the financial plank in the platform 
should be all things to all men. 

Yours Respectfully, Henry L. Nelson. 


Notes on Mr. Me Culloeli. 

Mr. Mc’Culloch’s views are, in the main, eminently 
sound and his conclusions also, and he is quite right 
in declining to criticize Chase now; although as a mat 
ter of history there can hardly be a doubt that the 
Legal Tender act was wanton and unnecessary, and that 
the war could have been carried on by the issue of 
long bonds mainly,—using treasury notes—not legal 
tender,—for occasional gaps. The mistake was in 
making the legal tender notes (which were really a 
loan,) the main dependence. Had we kept our four 
hundred millions of treasury notes, not legal-tender, 
as a floating reserve, everybody would in practice have 
taken them in payment for debts; just as we took 
bank notes in 1837, and afterwards in 1857. While the 
banks were then under suspense, the pressure of pub¬ 
lic opinion was so great that nobody refused; and dur¬ 
ing the war this pressure would have been still great¬ 
er. I say nobody ,—there may have been cases where 
loans were extended rather than to take pay in paper, 
but no attempt was made to enforce specie payment, 
and none would have been. 

Mr. Me Culloch suggests precisely the same course 
which was tried before and which he was unable to 
follow out,—contraction under a mere “resolution.” 
When the pinch came the pressure was too great. 
We need something like Mr. Ropes’s plan to commit 
the country beyond recall to redemption in gold. 

Can Mr. Mc’Culloch be right in saying two kinds of 
paper will not float ? Under the United States Bank its 
notes ran current, and also large amounts of State 
bank notes. Reduce greenbacks to §150,000,000 or 
§200,000,000 and they would certainly circulate if re¬ 
deemable in gold; there may be l'easons against them, 
but not that there cannot be two kinds of paper out. 

Shrinkage.—It is unwise to shut our eyes to the fact 
that to every merchant holding goods, to speculators 
in stocks, real estate buyers who give notes—to all 
in debt, there will be large shrinkage. This should 




















THE FINANCIAL RECORD. 


112 


not frighten us out of honesty, but we must meet the 
fact of what to the debtor is a real shrinkage, for he 
must pay in gold or good paper and his property will 
only sell at gold prices. 


The French Paper Money. 

[From the London Economist, Aug. 15.] 

The Revue des Deux Mondes publishes an interesting 
article by M. Victor Bonnet on the Notes of the Bank 
of France under the regime of the forced currency, 
with the purpose of defending economic principles 
from the false inferences that might be drawn from 
the phenomena which have attended the paper circu¬ 
lation since the war. Passing in review the amount 
of the circulation at different periods, he points to the 
apparent anomaly that when in November, 1871, the 
circulation was below 2300 millions, gold was at a pre¬ 
mium of 2 1-2 per cent.; but when, two months later, 
it had increased to 2450 millions, the depreciation in 
the paper money had fallen to 1 per cent.; and when, 
in the following October, the circulation exceeded 3000 
millions, the paper was almost at par, and had it been 
thought necessary to increase the legal limit of the 
circulation beyond the 3200 millions at which it then 
stood, no objections would have been raised, for all 
fears of a depreciation in the currency had vanished. 
What added to the singularity of that result was that 
the Prussian indemnity was then being paid, France 
had to procure all the specie possible, and in appear 
ance the issue of notes was destined to fill up the void 
in the metallic circulation. Such a phenomenon had 
never before been witnessed in the financial world. In 
England, during the suspension of payments between 
17y7 and 1819, notes with a forced circulation were 
issued to meet the insufficiency of coin, and the amount 
never exceeded 700 millions of francs, yet the paper in 
1810 fell to a discount of 25 per cent., and never rose 
to par before the resumption of specie payments. In 
November, 1871, the exchange on England had risen to 
26, on Holland to 216, and on Berlin to 383, equivalent 
to a loss to France of from 3 to 5 per cent. At that 
moment France had not had time to re-establish her 
commercial situation. She was also deficient in every¬ 
thing; raw material and provisions had to be pur¬ 
chased abroad, which was a primary condition of the 
revival of labor. Those purchases had to be paid, and 
the balance of trade was against France instead of be¬ 
ing in her favor as usual. The government on its side, 
to make its payments to Prussia, was buying up eag¬ 
erly all the bills on foreign countries, and thus com¬ 
peting with trade for its exceptional needs. At the 
same time speculation had driven up the price of the 
loan, issued at 82 1-2, to 88 and 90, and foreign sub¬ 
scribers hastening to realize a profit sent back their 
scrip to the French market, and which had to be paid 
ior with the profits accrued, thus adding to the embar¬ 
rassment. That was the situation at the end of 1871. 
M. Victor Bonnet next shows by what means France 
gradually recovered from her monetaiy difficulty. In 
the first place he pays a tribute of praise to the bank 
of France for the prudence with which it kept the cir¬ 
culation within moderate bounds. The limit had been 
increased in December, 1871, from 2400 millions to 
2800, but only once, in February, 1872, was the former 
amount exceeded. It fell immediately below 2400 mil¬ 
lions, and did not again rise above that limit until the 
month of September, after the negotiation of the sec¬ 
ond loan. In the mean time trade had improved; the 
exports had exceeded the imports, and France, from a 
commercial point of view, had again become the cred¬ 
itor of Europe; a part of the foreign securities amassed 
in more prosperous times had been sold abroad for a 
value estimated at 1500 millions; a share of the loan 
of three milliards was taken by foreign capitalists, and 
in consequence of the improved credit of France 
abroad, and the prudence exercised in not driving up 
the price of the new stock too rapidly, that capital re¬ 
mained a longer time invested in the French funds, and 
procured resources abroad. Lastly, an arrangement 
was concluded with a group of bankers, who engaged 
to furnish the government with foreign bills at a fixed 
rate (the amount contracted for was 700 millions). 
From all those causes, notwithstanding the payments 
to Germany, the rate of exchange receded to a limit 
at which exportations of specie ceased. The services 
of the bankers were no doubt dearly paid for, but they 
were, nevertheless, of the greatest utility. A matter 
of the first importance was to maintain the currency 
at its nominal value, and this would have been seri¬ 
ously compromised had the exchange remained unfav¬ 
orable. By contracting with the bankers they became 
interested in preventing it from rising too high, and 
they employed all their efforts to arrive at that result 
by drawing on their correspondents bills for which they 
would have to furnish the funds at a later period. By 
that means France enjoyed the benefit of a rate of ex¬ 
change at first somewhat artificial, but which soon be¬ 
came natural as the resources of the loan, with others, 
came in, and premitted her to repay the bankers their 
advances. France was thus able to complete the pay¬ 
ments to Prussia without any serious monetary dis¬ 


turbance, and while maintaining a paper circulation of 
3000 millions at par. M. Bonnet maintains that dur¬ 
ing all the period in question the economic theory of 
Adam Smith—that the notes should vary with the coin 
they replace—was not violated. In England during 
tLe forced currency, as in Italy and Austria at present, 
the circulation was increased to replace the metal 
which was leaving the country. But in France the 
case was different; the specie remained in France hoarded 
in the pockets of the people , although it had ceased to circu¬ 
late ; but it was known to be there, and would be found 
again some day, and that fact sufficed to give stability to 
the notes which replaced it. Thus with the stock of specie 
in France, which amounts to 5000 or 6000 millions (say 
$1,250,000,000, or ten times what the U. S. has), the 
note circulation resembles that of the former deposit 
banks of Venice, Amsterdam, and Hamburg. The 
writer, however, adds that to argue from these premises 
that henceforth it would be preferable in moments of 
difficulty to extend the circulation rather than increase 
the price of money to too high a point, would be to 
commit a gross error, and mistake a mirage for a 
reality. He is opposed to too rapid a reduction of the 
rate of discount at prestnt, as in the event of an ex¬ 
cess of speculation it would be more difficult to remedy 
the evil with a circulation of 2500 millions based on a 
cash reserve of 1000 millions, than with an issue of 
800 millions and a reserve of 200 millions; in the one 
case the decouvert is 1500 millions, and in the other 600 
only. The idea that a reserve of one-third is sufficient 
is shown by experience, he adds, to be an illusion in 
moments of crisis; in January, 1848, the bank of 
France held cash to the amount of 107 millions inde¬ 
pendently of its branches, with a circulation of 233 
millions, yet three months later it became necessary to 
decree the forced currency. For that result a political 
revolution is not necessary; a simple commercial crisis 
is sufficient. In 1857, at the hight of the crisis, the 
bank held 189 millions of specie to 580 millions of 
notes; the proportion of a third was almost main¬ 
tained, yet the bank contemplated asking the govern¬ 
ment to authorize it to suspend its payments in specie, 
and the rate of discount had to be raised to an exces¬ 
sive hight to avert the peril. M. Bonnet wishes to see 
the bank of France more prompt in having recourse 
to that remedy in times of crisis. The English public, 
he remarks, may sometimes regret to have to pay 
money too dear, but they do not recriminate against 
the necessity, and submit to it without complaining. 
In France, on the contrary, not only irrita tion is man¬ 
ifested against a rise in the rate of discount when it 
takes place, but people imagine that it can be avoided 
by such expedients as an increased issue of paper 
money. 

Parties and the Currency. 

[From the Chicago Tribune.] 

A review of the present attitude of political parties 
on the question of national finances presents some ex¬ 
traordinary facts. In the six New England States the 
Democratic party successfully rivals the Republican 
party in a demand for an early restoration of specie and 
the payment of the national debt in coin. In New 
York both parties occupy the same attitude on this 
subject, the Legislature at its late session, by an unan¬ 
imous vote, protesting against inflation, and insisting 
on specie resumption. In New Jersey, Pennsylvania, 
Deleware and Maryland, both parties take the same 
view of this question. It is not until the Ohio River 
is reached that there is any diversity of opinion. 

Ohio is represented in the Senate by one Democrat 
and one Republican, both of whom favor specie re¬ 
sumption and oppose inflation. The Republican party 
is doubtful on that question, while the Democratic Con¬ 
vention actually treats specie payments as an evil to 
be avoided as long as possible. In Indiana, the two 
Senators are Republicans, and both inflationists; one 
of them is a candidate for the Presidency. The Dem¬ 
ocrats of that State have also a candidate for the 
Presidency, and, subordinating all other matters to the 
personal elevation of these men, the two parties in 
Convention have been engaged in outbidding each 
other for popular support by dishonest propositions to 
debase the currency and to degrat e the national credit. 
Perhaps in no State in the Union, nit even in Missis¬ 
sippi or South Carolina, has public opinion, so far as 
the same is represented by the political parties, settled 
upon such a low plane of commercial morality as in 
Indiana. 

In Michigan, the Republican party has had an over¬ 
whelming majority for many years and is now repre¬ 
sented in the senate by Messrs. Chandler and Ferry. 
One of these, Ferry, is an inflationist of the Morton 
school, and the other is opposed to inflation. At the 
recent Convention of the party, the Ferry faction ob¬ 
tained control, and placed the party in that State 
alongside the Democratic party in Ohio. On the 
other hand, the opposition at their preliminary Con¬ 
vention adopted a platform similar to that adopted in 
Illinois, and agreeing substantially with those in the 
Atlantic States. * 

In Illinois, the Republican members of Congress 


( with two exceptions ) and the two Senators all voted 
for inflation and against the President’s veto. The 
Democratic members of Congress, with one exception, 
voted the same way. The declared policy of the Con¬ 
gressional delegations was therefore in favor of infla¬ 
tion. The Republican State Convention, while refusing 
to indorse Logan and the other Republican Congress¬ 
men, also refused to indorse the President, and dodged 
the real question at issue. The Independent, or Farm¬ 
ers’ party, did even worse. Next comes the Demo¬ 
cratic Convention, including a large number of Liber¬ 
als from other parties, favoring specie payments, op¬ 
posing inflation, and insisting upon the payment of 
the national debt in the money recognized by the 
world. 

In Iowa, both the Republicans and the opposition 
take ground in opposition to inflation, in favor of the 
resumption of specie payments, and in favor of an 
honest payment of the national debt. 

In Kansas, the Republicans incline, like those of 
Michigan, to inflation and repudiation, and the Oppo¬ 
sition is likely to follow suit. 

In Missouri and Kentucky, the Democrats adopt 
the bad platform of their friends in Ohio, and tha 
Republicans have not the courage to differ. In Ne¬ 
braska and Minnesota, there have been no conventions 
yet held, but the Republicans will probably follow 
their party in Michigan, while the Opposition will not 
materially differ from them. In the more Southern 
States, the question of the social equality of the negro 
for the time overules all others, but the prevailing 
sentiment is for an inflation of the currency. The 
three States on the Pacific are unanimously in favor 
of hard money. 

Such is the extraordinary condition of parties on 
this, the most important question of the day. Ohio, 
Indiana, Missouri, Michigan and Illinois have aspirants 
for the Presidency, and the party policy in these States 
on the currency question has bebn shaped mainly with 
reference to promoting the chances of these candi¬ 
dates, and the real sentiment of the people has been 
to a great extent smothered. In Iowa, public senti¬ 
ment has been more freely expressed than anywhere 
else in the West, and that sentiment is in favor of 
honest dealings with the public creditors and a cur¬ 
rency equivalent to coin. In this State, at the late 
Convention, the old intriguing politicians were slaugh¬ 
tered and a like declaration made. This condition of 
affairs is too anomalous to continue, the matters in¬ 
volved are too important to be piade a matter of traf¬ 
fic, and the sooner there is a general gravitation of 
the people to one side or the other, and the distinct 
issue made for or against a specie basis, the sooner 
will the question be decided, and the national credit 
placed beyond doubt or reproach. 


A Tale of Two Cities. 

Philadelphia sends us this morceau of economical 
wisdom on a postal card: 

“Money is plenty.” Yes, with stock brokers, ban¬ 
kers, and non-producing money manipulators; but with 
artisans, mechanics, manufacturers, workingmen, and 
that large class who produce the wealth of the country , it is 
scarce, even with real estate as security. 

A Ring controlling the Government loans to the Na¬ 
tional Banks three hundred and fifty millions of dollars 
ivithout interest! (for which the people at large would be 
glad to pay at least four per cent per annum, thus sav¬ 
ing fourteen millions of dollars a year,) but, worse than 
all, allows the Banks interest on the securities deposited for 
the loan , and taxes the dear people to pay the bonus. 

The Government issues three hundred and fifty mil¬ 
lions of greenbacks direct, paying no interest, asking 
no interest. McCullough and his backers, the capita¬ 
lists, want the greenbacks withdrawn and national bank 
notes issued in their place! How long must we submit 
to this money monopoly ? 

Question your candidates, and vote for no one in fa¬ 
vor of such monstrous injustice. 

Cincinnati, on the other hand, makes this sensible 
appeal through many of her business men who sign a 
card in the city newspapers. We shonld be sorry to 
think that Philadelphia is less sound than Cincinnati on 
the currency question 

The undersigned, voters in the first congressional 
district of Ohio, recognizing that the question of the cur¬ 
rency is now of paramount importance, believe that 
sound policy, as well as good faith, demands the pro¬ 
hibition of any increase of our irredeemable paper 
currency, and the speediest possible return by the 
government to hard money. We, therefore, do now 
hereby pledge ourselves that, if only one of the politi¬ 
cal parties nominates a candidate for Congress who is 
in known sympathy with our views on the currency 
question, or who stands upon a platform in accord with 
them, we will vote for him, if a fit man, irrespective 
of party affiliations; and, if neither party nominates 
such a*candidate, that we will, in mass convention, 
make an independent nomination, and will support him 
at the polls. 

















gdnerian $mut 

5 Pemberton Square, Room 21. 

Bustos, Sept. 18, 1874. 

The Sixth number of the Journal of Social Science has been published by Hurd & Houghton, 13 Astor Place, New York, and may be obtained of 
all booksellers, or by addressing the undersigned. It contains the proceedings of the New York meeting of the American Social Science Associa¬ 
tion and a part of the papers and debates there in May last. Among these are the Address of the President, by George William Curtis; The 
Work of Social Science in the United States, by P. B. Sanborn; Financial Administration, by G. Bradford; Duty of States toward their Insane Poor, by 
Dr. John B. Chapin; The Settlement Laws of Massachusetts, by Edward W. Bice; Pauperism in the City of New York, by C. L. Brace; A Discussion 
on Pauperism; Conference of Boards of Public Charities; The Farmers' Movement in the Western States, by Willard C. Flagg; Rational Principles of Tax¬ 
ation, by David A-. Wells; American Railroads, by Gardiner G. Hubbard; Reformation of Prisoners, by Z. R. Brockway; Sir Walter Crofon's 
Recommendation of the Irish Convict System; The Protection of Animals, by George T. Angell; and American Finance, by Prof. W. G. Sumner. 

The Seventh number, now in press, to be issued about September 30, will contain the rest of the papers read at New York, including one by Rev. 
Dr. Woolsey, of New Haven, on The Exemption from Capture of Private Property upon the Sea; one by President White, of Cornell, on The Relation 
of National and State Governments to Advanced Education; one by William W. Greenough, of Boston, on Public Libraries; and one by Cephas 
Brainerd, of New York, on The Social Science Work of the Young Men's Christian Association. There will also be printed in this number the proceed¬ 
ings of a Conference of Boards of Health, including papers and remarks, by Drs. Bowditch and Jarvis, of Massachusetts; Drs. Harris 'and 
Smith, and Prof. Chandler, of New York; Dr. Baker, of Michigan, Dr. Hearth, of Minnesota, etc. These will be followed by general papers 
upon Sanitary subjects; on School Hygiene, by Dr. D. F. Lincoln, of Boston; by Dr. J. Foster Jenkins, on Tent Hospitals; by Dr. Alfred L. 
Carroll, of New York, on Sanitary Science in Schools and Colleges; by Dr. Henry A. Martin, of Boston, on Animal Vaccination; by the Editor on 
Training Schools for Nurses, etc. 

The paper by President White is nearly the same as that lately read at Detroit, and will be here printed in full, along with the remarks of Dr. 
McCosh, of Princeton, and Dr. Tullock, of Scotland, and President White’s reply to Dr. McCosh. There will also appear a Report from the De¬ 
partment of Social Economy on the Prison Question, and a Report on Statistics of Charities, containing the form of Questions lately adopted by 
the State Boards of Public Charities, and a complete list of the members of those Boards. A complete list of the members of State Boards of 
Health also appears in the number. Owing to unavoidable delays its publication has been deferred for a week. As the edition of No. VII will be 
small, persons other than Members of the Association, desiring copies, are requested to subscribe for them in advance. The price for each number 
is §1.00, and subscriptions may be sent to F. B. SANBORN, 

Secretary of the American Social Science Association. 


FINANCIAL RECORD. 

‘WE NEED ONE THING BESIDES MORE MONEY, AND THAT IS BETTER MONEY V—Senator Each. Chandler. 


VOL. I. 


FRIDAY, SEPTEMBER 25, 1874. 


NO. 34. 


The Financial, Recoed will be continued until further no- 
tice, and will be sent free of postage, to all persons who will re¬ 
mit 50 cents to the publishers. All editors who receive it are 
invited to send their papers in exchange. It will no longer be 
published by the Ajiekican Social Science Association. 
but for the present, as heretofore, communications respecting 
“ may be addressed to the Secretary of the Association; F. B 
aanborn, No. 5 Pemberton Square, (Room 21,) Boston; and all 
exchange papers, public documents, etc., may be forwarded tc 
the same address. 


Platforms, Speeches and Addresses. 


The most important party declarations of the past 
week are those of the New York Democratic and Re¬ 
publican Conventions. The Democratic platform opens 
with these terse and noble sentences: 

The Democratic party of New York pledge them¬ 
selves anew to the principles set forth in their platform 
adopted last year at Utica, approved by the votes of 
the people of the Empire State, and indorsed by the 
Democrats of Illinois, Michigan, Maine, and other 
States of the Union; 

1. Gold and silver the only legal tender, and no cur¬ 
rency inconvertible into coin. 

2. Steady steps toward specie payments, and no 
step backward. 

3. Honest payment of the public debt in coin and 
the sacred preservation of public faith. 

The Republican reference to the currency question 
is quite as decided and quite as good. It is as follows: 

5th. That we oppose any inflation of the paper cur¬ 
rency and indorse the President’s veto of the inflation 
act: and we are in favor of a return to specie pay¬ 
ments, and of such action on the part of the govern¬ 
ment as will speedily secure that result. 

Most of the other platforms are those of Congres¬ 
sional districts. After a contest in the opposition con¬ 
vention for the seventh Illinois district, the inflation¬ 
ists obtained the control, approved the nomination of 
the Independent candidate (inflationist,) and adopted 
a platform which after reaffirming the principles of 
the Springfield convention, proceeded as follows:— 
“That we are in favor of Treasury notes or green¬ 
backs as the currency of the country, to be maintained 
at par with gold.” The Democrats of the Seventh 
Wisconsin district, on the contrary, nominated a hard 
money man and adopted a specie payment platform. 
The Democrats of the fourth Maryland district renom¬ 
inated Governor Swann, and resolved thus on the cur¬ 


rency question: 


That a sound national currency is a vital necessity, 
and that it is the constitutional duty of the govern¬ 
ment to provide it; that the evils of a paper currency 
nonconvertible at par into gold, fall with peculiar 
hardship on the agricultural and industrial classes, by 
erecting two different standards of value, by one of 
which they are compelled to buy and by the other to 
sell—they thus being the losers on every transaction 
by the difference between the two mediums of ex¬ 
change. 

That the general government being at present the 
great public debtor to the whole extent of its out¬ 
standing bonds and legal tenders, and its credit being, 
indeed, the basis of the whole existing circulation of 
the country, any measure calculated to impair that 
credit would be a great public calamity and a national 
dishonor; we are, therefore, in favor of the govern¬ 
ment fairly and faithfully meeting all its obligations, 
of every description, in the only currency recognized 
by the Constitution and the commercial world—coin. 

That we favor a return to specie payments as early 
as practicable, as a measure indispensable to a full res¬ 
toration of the public credit, and of that security and 
confidence without which the business of the country 
cannot safely go on; and to that end we declare our 
belief that the government should at an early day 
cease to discriminate against its own issues of paper 
money, and make the legal tenders receivable for cus¬ 
toms duties; that continuance of the requirement 
that they shall be paid in gold is unnecessary and a 
reflection on its own credit, and now forms the chief, 
if not the only, reason why gold does not enter fully 
into all the channels of trade, and thus make the paper 
dollar equal to the gold. 

These gentlemen seem to have forgotten that the 
collection of customs duties in gold is one of the ob¬ 
ligations of government to be “fairly and faithfully’' 


met. 


The Democrats of the fifth Michigan district, now 
represented by an inflationist Republican, adopted 
this clear and honest resolution: 

That while the people demand a return to specie pay¬ 
ments, it is vain and delusive for parties to respond 
to the appeal without a policy, and, in the opinion of 
this convention, the first measure requisite is a repeal 
of the Legal-tender act, sufficient time being given to 
the government, and to take effect prospectively; and 
the second, to legalize free banks on a specie basis. 

In the eighth district of the same State, the Demo¬ 
crats nominated Mr. George F. Lewis, who favors an 
early resumption of specie payments. 

The Liberals of the Fourth Illinois district have 
nominated General Farnsworth, who said, in his speech 
of acceptance, “I am opposed to an inflated and de¬ 
preciated currency, and in favor of reaching Ue hard- 
pan of a gold basis as soon as it can bfdune without 
detriment to the business interests of the community.” 
The reformers of the First Wisconsin district adopted 
a resolution in favor of the resumption of specie 
payments at the earliest practicable period. The 
Michigan reformers have issued an address to the 
people from which we make the following extracts: 

The Republican party at its Lansing Convention 
intentionally adopted a meaningless declaration on the 
financial question and it has nominated seven infla¬ 
tionists for re-election to Congress. The Democratic 
Convention at Kalamazoo wisely declared in the most 
positive language in favor of a return to hard money. 

. . . .The Republican party in this State is an inflation 
party, and is opposed to reform. The Democratic 
party is merely a hard money party, and to this extent 
we are thankful to Democratic co-operation. The 
National Reform party is sound on both questions and 
with your assistance will ever continue to be. 

The Republicans in their Ohio Wisconsin district 
adopted a lucid resolution to the effect that,“We believe 
that if our national revenue shall continue to be kept 
in excess of the expenditures, that fact alone will in 
time bring our circulating medium to a par with gold.” 

Governor Hendricks has made ancrther speech from 
which we make some extracts: 

The expression in favor of a return to specie pay¬ 
ments is very general, but the real question is when 
and how can that be accomplished ? So long as the 
supply of coin is so small as compared with the paper 
money it is impossible. The effort now would prob¬ 
ably result in commercial disaster. The people so be¬ 
lieve. No sentiment attributed to Mr. Greeley in 1872 
was more hurtful to his political fortunes than the de¬ 
mand for immediate specie payments. To render it 
possible, without hurt to the country, coin and paper 
must come nearer together in quantity. They will 
then be near, if not uniform, in value. How shall 
that be brought about ? By reducing the paper cur¬ 
rency ? With the present burden of National, State 
and local taxation, and the large volume of other in¬ 
debtedness to be provided for, that can not be borne. 
It would cramp business and paralyze labor. No one 
desires to return to specie payments more earnestly 
than myself, for I believe gold and silver are the real 
standard of values, universal and permanent. All 
the money of the country should be of uniform value 
and readily convertible. But we are not in that con¬ 
dition. Our paper money exceeds the coin by nearly 
five dollars to one. How will we bring them nearer 
together in quantity, that they may approach and meet 
in value ? Shall we commence at the top and tear 
down, or at the bottom and build up ? Business, en¬ 
terprise and labor, every important interest of the 
country, demand that the volume of the currency be 
maintained to meet their requirements; but every in¬ 
terest will be strengthened by increasing the supply 
of coin. How is that to be accomplished ? By en¬ 
couraging an increased production of our great staples 
that command the foreign market; by reducing our 
expenditures in foreign purchases; and by reversing 
the fatal policy which has sought to mike our debt a 
foreign debt. When we purchase less of foreign 
goods and sell more of our productions abroad, and 
cease to pay go much of the interest on our debt 
abroad and pay it to our own citizens, the current of 
gold will turn toward our shores; and then specie pay¬ 
ments will be certain, natural and permanent, and 
will become the basis of an enduring prosperity. 


The declaration in our State platform that the five- 
twenty bonds should be paid in treasury notes has at¬ 
tracted much attention. The subject for some years 
has not been considered by the people. In 1868, when 
it was a living and practical question, I thought, and 
so attempted to maintain, that the laws under which 
the bonds and greenbacks were issued allowed the pay¬ 
ment in the latter. I have no doubt that the laws ad¬ 
mitted that construction. And I think no subsequent 
legislation should have changed the mode of payment. 
But by the first act which President Grant signed in 
1869 the faith and honor of the country are pledged 
to the payment in gold. A lower standard cannot be 
set up for the Government than that which measures 
the rights and liabilities of individuals. It is because 
the act of 1869 is binding that it was so grievous a wrong 
upon the people. The party which did it should be 
held politically responsible. This question is rapidly 
losing practical importance, for the bonds have been 
converted into five per cents., carrying the promise of 
payment in gold upon their face. That is one of the 
wrongs resulting from the act of 1869. 


A Lazy Spinner. 

Mr. Spinner has contrived to put a stop to the only 
redeeming feature of the currency act of June. He 
has given notice that the offerings have been so large 
the five per cent, fund is exhausted, and that those 
who have notes to send in must wait until he can have 
the present supply counted, assorted and sent back to 
banks, and the fund made good again. The process 
of redemption is this: The notes being received by 
the Treasurer, are counted, and the amount in green¬ 
backs goes back to the sender. Then the bank notes 
are assorted, and when a sufficient amount of the bills 
of one bank have been gathered, they are sent to the 
issuing bank which is thereupon required to make 
good the sum in greenbacks. 

Now let us see how active Mr. Spinner has been. 
This redemption began about the 4th of July. At the 
close of that month he had received $10,500,000 in 
bank notes for redemption and had probably returned 
eight millions in greenbacks to the senders. This is 
an estimate, but the Treasurer failed of his duty if 
he was a week behind in counting the notes. August 
19th, the announcement was made with flourish of 
trumpets that the Treasurer had assorted and was 
ready to send to banks $1,000,000 of redeemed notes. 
At that time he had received over $14,000,000, or an 
average of $7000 for every national bank in the coun¬ 
try, he being authorized to demand more greenbacks 
from any bank whose fund was impaired to the 
amount of five hundred dollars. 

Redemption went on nevertheless, up to last Satur¬ 
day, "when Mr. Spinner startled the country by an¬ 
nouncing that his funds had given out. He had re¬ 
ceived for redemption about $25,000,000. His fund 
originally amounted to $17,500,000, consequently he 
must have assorted, bundled up and sent back $7,500,- 
000 . 

If this burden has really occupied one hundred 
clerks, we can easily find out how active they have 
been. The average value of each bank note out¬ 
standing, by the last report of the Comptroller, was 
$7.40. This would make the number of notes as¬ 
sorted just about 1,000,000. The clerks had sixty-six 
working days, so that the average daily work of the 
whole force was to take care of 15,151 separate bank 
bills, or 150 1-2 notes to each clerk daily. Such won¬ 
derful quickness is a great credit to our excellent civil 
service! Inadequate as our redemption system is, it 
is a step in the right direction, and the offerings of 
notes have proved the necessity for it. Had Mr. Spin¬ 
ner entered into the work with any zeal, and had he 
infused earnestness into his clerks, we should have had 
neither his absurd call for voluntary contributions 
from banks, nor this last disgraceful confession of in¬ 
competency. If we cannot have a real redemption in 
money, and if we cannot get a system of naturalcon- 


























115 


THE FINANCIAL BECOED. 


traction by a preference of the people for greenbacks 
instead of bank notes, this plan did at least promise to 
give us clean and whole rag money, and we cannot go 
back to the old way. For the present, however, 
there is nothing to be done. Mr. Spinner sometimes 
prefers Ills own laws to those made by Congress. In 
this case he has put himself, either intentionally or by 
Iris inefficiency in a place where he cannot obey the 
law, and we must submit until his leisure permits him 
to count up the notes he has on hand and send them 
back to the banks. 


Spirit of the Press. 

[New York Evening Post.] 

Butler and Pendleton, belonging to different parties 
for the last fifteen years, and holding positions of the 
most unyielding hostility toward each other, have 
been singularly in accord upon one of the most impor¬ 
tant questions that has entered into recent political 
discussions. Both have boldly advocated that indi¬ 
rect and timid kind of repudiation contemplated by 
paying the national debt in greenbacks, and both fa¬ 
vor the policy of inflation. It is remarkable, however, 
that both find it necessary or convenient at this time 
to adopt an apologetic tone. While they reiterate 
their opinions in a modified way they make a great 
effort to explain and excuse them. Both deny the 
intent of repudiation, and both find relief to a degree 
in their acquiescence in the proceedings of Congress 
confirming the fair interpretation of former acts to 
pay the national debt in the money of the world. 

[Cincinnati Enquirer.] 

Mr. Pendleton’s position in political affairs is un¬ 
mistakable. With the tongue of a poet and statesman 
he paints the appalling results of the contraction of our 
currency since the war. Just as every thing contracts, 
and contracts and contracts at the approach of winter, 
as the leaves fall and the flowers die, and death covers 
the earth, thus noiselessly and insiduously the contrac¬ 
tion of ali means of doing business compress and freeze 
industry. The oration of Mr. Pendleton has set the 
Democratic party right. We are not surprised that it 
won both the wild enthusiasm of the people and the 
deliberate endorsement of thinking men. Mr. Pendle¬ 
ton, it is understood, has something else to say during 
the campaign so illustriously opened. 

[Cincinnati Gazette.] 

Mr. Pendleton said in his speech at Columbus, he 
would keep a return to specie payment steadily in view, 
as the only sound condition, but he would issue more 
greenbacks; although he said this was going away from 
specie payments. He means he would keep the point 
in view while rowing away from it. One reason 
why he would issue more greenbacks is that if we 
count the various forms of temporary debt as currency, 
we have much less titan during the war. But if Mr. 
P. would keep steadily in view a return to specie pay¬ 
ment, would he let go all this progress made toward 
it, by emitting greenbacks to equal all the forms of 
temporary debt that were paid off ? Another reason 
why he would issue more greenbacks, while looking to 
specie payment, is that there was a money panic last 
fall. But there was as much money at the time of the 
panic as there was one, two, three or four years be¬ 
fore. How, then, did contraction, or a scarcity of 
money, cause the panic? 

[N. Y. Nation.] 

General Butler has made a rather lame defense of 
his last winter’s campaign in Washington. He gives 
his reason for voting in favor of the first inflation 
scheme, and it is, as might have been expected, that 
he knew that what the country needed was inflation, 
and not contraction. He says that the great curse of 
this country now is the high rate of interest for money, 
about which he seems to have some private informa¬ 
tion, for he says it is from 12 to 15 per cent. He de¬ 
clared that the money-lenders are the only r people in 
the United States who make any money, for they 
lend to the producer, and, taking from him 12 or 15 per 
cent., leave him nothing for profit, so that he has to 
cultivate the ground at a loss, and continually falls 
behind, until he will very soon have to stop altogether. 
Perhaps by that time the money-lender will see how 
foolish his conduct has been, and lower his rates; but 
the General does not hold out any hopes of this. 

[Vicksburg (Miss.) Times.] 

The inflation journalists of Indiana are making des¬ 
perate efforts to draw a distinction between the views 
of Senator Morton and those of the Hon. D. W. Voor- 
heers, but they are not very successful. The Indian¬ 
apolis Journal wrestles bravely with the question for a 
time, and then comes to the conclusion that Voorhees 
“is nothing but Morton diluted and squirted the wrong 
way,” which is picturesque if not conclusive. 

[Detroit Abend-Post.] 

The Michigan reformers’ platform is conspicuous 
for What it does not contain. The financial plank is 
ambiguous—in short, the whole affair is neither hot 
nor cold, fish nor flesh. The reformers, instead of 
making a bold stroke like that of the people’s party in 
Illinois, have made a mess of it. The canvass seems 
resolving into one embracing the personal merits of 


candidates; and the best the voters can do is to select 
from the lists the most capable and liberal men with¬ 
out respect to party; taking care, in the case of Con¬ 
gressmen, to vote for no salary grabber or inflationist. 
If the people do this, they will already have .accom¬ 
plished a reform. 

[Cincinnati Commercial.] 

The inflationists are on the anxious seat. They find 
the democracy of such States as Illinois and Massachu¬ 
setts pronouncing against their wildcat schemes. And 
even here in Ohio, the democracy of one of the north¬ 
eastern counties refuse to train to the music of the 
Columbus Convention. The repudiationists will have 
to be set off in a little squad by themselves. There are 
a few Republicans whom that party would be glad to 
see desert and go over to the fellows who think that 
the policy of stuffing the people’s wallets with a cur¬ 
rency, the purchasing power of which contracts as its 
volume increases, is a national blessing. 

[N. Y. Times.] 

Mr. H. C. Carey has recently addressed a letter to the 
Secretary of the Treasury, which displays some of his 
most characteristic qualities. It is obviously prompted 
by benevolence. Mr. Bristow cannot be expected 
to know everything as a philosopher knows it. 
He may perceive, for instance, that there is a good 
deal of paper money afloat, and that there is a dispute 
going on between what appears to be a small minority 
of muddle-headed inflationists, on the one hand, and 
the rest of the country, on the other, as to what shall 
be done with that money. But he may well be excused 
for being unable to trace it back to the origin of things. 
This want, therefore, Mr. Carey is ready to supply. 
The Secretary himself, in all probability, will turn but 
a deaf ear to the instruction of the Philadelphia sage. 
He is understood to incline to the notions of finance 
taught by those antiquated authorities, Washington and 
Hamilton, Jackson and Webster. And he is backed 
by an obstinate soldier President, who, in his turn, is 
supported by Senator Jones, of the gold-contaminated 
State of Nevada, and by the ignorant bankers and 
merchants, manufacturers and farmers of the country. 

[Cincinnati Enquirer.] 

While the democracy of New York are idiotic to some 
extent in their platform, they deserve and will win vic¬ 
tory at the polls. Let the democracy carry every 
State within their reach upon any honest platform. 
We have no fears that when they shall have carried 
enough of them there will be any serious lack of har¬ 
mony in the National Democratic party. 

[N. Y. Tribune.] 

The Michigan Reform party has this month made a 
most commendable change in its former declaration of 
principles. At its first meeting in August, it put out 
a platform containing the usual meaningless twaddle 
about the returning to specie payment, so soon as the 
safety of “the business interests of the country would 
permit.” In the second platform this resolution is re¬ 
placed by the following: “A speedy return to hard 
money as the only standard of value.” Evidently the 
reformers have not mingled with the people a month 
for nothing. The denunciation which greeted their 
former platform has opened their eyes. 

[Spriugtield (Ill.) Register Democrat.] 

Whenever you hear any man saj' he is in favor of an 
issue of greenbacks, spot him for a fool or a knave. 
The decision of the Supreme Court is to the effect that 
Congress has no power to issue greenbacks in time of 
peace. If an inflationist knows this, he is trying to 
cheat somebody by speaking in favor of a policy which 
he knows can never be put into practice; if he don’t 
know it, he is talking of a subject he don’t understand. 

[Kalamazoo (Mich.) Telegraph.] 

In the Pendleton-Butler financial scheme, the “debt¬ 
or class” is the one whose interests are selected as de¬ 
serving of the especial care of the nation. “Wliat does 
resumption mean ?” says one of the orators who are 
busy instructing the people in the system we have 
named, and he answers his own question in this wise: 
“It means the oppression of the poor debtor, and the 
advantage of the grasping creditor.” We do not re¬ 
member to have heard much of the injustice of injuring 
private creditors at a time when the Government pro¬ 
posed running into debt. Is there any reason why the 
debtors should be preferred to the creditors, that the 
Government should refrain from doing what it ought to 
have taken steps to do long ago, and pay its honest 
debts ? Again, when will it ever be possible to retux-n 
to specie payments under this principle ? The objec¬ 
tion is that we must not do an act of injustice by com¬ 
pelling men who borrowed bad money to pay good 
money. We must not do anything, in other words, 
to make our promissory notes more valuable to their 
holders, so long as thei'e exists anybody who has bor¬ 
rowed any of those notes when they were below par. 
This, of coui’se, will never be, and the proposition that 
we must wait until all indebtedness, contracted in de¬ 
preciated paper, is wiped out before we make any at¬ 
tempt to return to specie payments, simply means that 
we are never to return to specie payments. 

[Boston Advertiser.] 

Another step toward resumption of specie payments 
has been taken by France. When the increased issues 
of the Bank of France were to be forced on the peo¬ 
ple,. the receivers of taxes and treasures in all the de¬ 


partments were instructed to retain and send to the 
treasury all the coin paid in, but to make payments 
invariably in paper. The specie thus received was 
passed to the government account by the bank, which 
has thus been aided in its efforts to regain a hard 
money reserve. Some time ago the treasury gave 
orders to the treasurers-general to pay out silver, and 
now all restrictions are removed and gold coin is to be 
used in payment of government expenditures. Thus 
the government itself has fully resumed, while the 
bank is still allowed to refuse payment of its notes in 
specie. 


How to have a Secretary of the Treas¬ 
ury. 

[From the Chicago Tribune.] 

Mr. Gamaliel Bradford, of Boston, has suggested a 
plan for the accomplishment of that most desirable 
end,—a definite financial policy. He would have the 
English system of Ministerial responsibility adopted, 
so far as the Secretary of the Treasury is concerned. 

At pi-esent, this official is little else than a head clerk 
while Congi’ess is in session. The House committees 
arrange about taxation and appropi’iations and map 
out a genei’al financial policy. The House ratifies it, 
and the Secretary does as he is bid. During the 
Congressional vacations he does what he wishes. A 
Boutwell issues a few millions ofshinplasters to “move 
the ci-ops,” and syndicates the public debt to suit him¬ 
self. A Richardson resumes specie-payments, 35 at a 
time. The result of all this is that we have no fixed 
policy. Our temporary makeshifts are patched up, in 
the odd moments of a busy session, by this or that 
committee, and the man nominally in charge of our 
finances is little more than a cashier. Tlieie are inci¬ 
dental evils. The question of finance is not regarded 
from a national point of view. Every man concerned 
in settling it is busily thinking of the probable effect 
of this or that measure, not upon the country, but 
upon his own constituency. It is not handled by men 
to whom it is the gi-eat object. It is one of many things 
that claim their attention. It is not handled by men 
trained to finance. Alexander Hamilton is not re- 
pi'oduced in the average Congi’essman, but this average 
man, under the present system, decides what make¬ 
shift shall bi’idge over the vacation. To secui’e the 
essentials of good financial administration, which he 
regards as unity, continuity, publicity, i-esponsibility, 
national repi'eseutation, individual talent, and skill, 
Mr. Bradford suggests this plan: “The conversion 
of the nominal into the real head of the finances, the 
admission of the Secretai'y of the Treasury to the floor 
of Congress, with the right and duty of taking part in 
debate, and subjection to what the French call inter¬ 
pellation.” 

Such a Secretary would receive estimates of necessa¬ 
ry expenses from all Heads of Departments. He could 
inci'ease or diminish these, if he wished. He would 
pi'epare a balance-sheet and submit it to the House. 
If it showed a probable sui-plus, he would recommend 
the remission of certain taxes, or the retirement of a 
certain amount of gi’eenbacks, or the increase of 
certain expenditures. If it showed a probable deficit, 
he would recommend an increase of taxation upon 
some article or articles, or a decrease in expenditure. 
The financial debate would be confined to this one 
plan. Any member of the House could suggest an 
amendment. The Secretary would signify his accept¬ 
ance or injection of it. If he rejected it and the 
House maintained it, he would resign, and the Pi’esi- 
dent would appoint his successor. So, too, if his 
whole plan were ultimately rejected, he would l'esign. 
This plan would place power and responsibility in the 
hands of the Secretary of the Treasury. Trained 
financiers would be called to the place. Their rec¬ 
ommendations would enlighten Congi'ess.. Continuity 
of plan, so far as it is needed, would be secured by the 
necessity imposed upon each Secretary of showing why 
he departed from his pi’edecessoi’s’ plan, if he did so. 
The utmost publicity would attend the final formation 
of the plan.. Its unamended draft would he con¬ 
structed by a man representing the whole nation, and 
therefore thinking only of the interests of the whole 
nation. Thus the essentials of financial administra- 
tion, as enumei’ated by Mr. Bi'adford, would be com¬ 
passed. 

The theory, on a larger scale, has worked like a 
charm in England. Guizot and Thiers have both 
praised it there without stint. A wi'iter xj hom Mr. 
Bradford quotes speaks of the principle of ministerial 
responsibility as “the latent essence and effectual 
secret” of the English Constitution. May, in his 
“Constitutional History of England,” speaks of it in 
equally high terms. We ought not to imitate our 
British brethren, who are apt to reject anything, that 
is American, by rejecting this theoi-y because it is 
English, If, as Mr. Bradford claims, it would bring 
order out of confusion, establish a fixed, wise policy, 
and so take us one step nearer specie-payments, the 
sooner we have it the better. Its adoption would not 
be difficult if public men would tacitly consent to it. 
If they should do so, a mei'e change in the business 
arrangements of the Treasui'y Department, and of the 











THE FINANCIAL RECORD. 


116 


House Committees on Ways and Means and Appro¬ 
priations, would effect it. But if they should oppose 
the idea, as they probably would, a constitutional 
amendment would be needed. 


Banking 1 and Inflation. 

Mr. Henry C. Carey of Philadelphia, is a writer of 
fixed opinions, and of many prejudices; his information 
and experience are great, however, and in all that he 
writes for publication there is something valuable; 
though the conclusions he reaches are oftentimes the 
very reverse of what the Record considers legitimate. 
In some recent letters to Secretary Bristow, Mr. Carey, 
while arguing in favor of the 3.65 currency bonds, 
first publicly recommended by Horace Greeley in 1871, 
makes some remarks on New England banking and 
call loans of bank deposits which deserve to be read 
and considered. He says: 

The individual who has uninvested capital remain¬ 
ing in the form of money, and retains it in his strong 
box, is certain to meet no competition in the market 
arising out of its existence. Let him, however, while 
seeking for investments, lend it to his neighbor to be 
returned on call, and it will at once become duplica¬ 
ted, the owner and his debtor being both employed in 
using the same identical money, and perhaps compet¬ 
ing with each other for purchase of the same commod¬ 
ities with correspondent tendency towards increase 
of prices. What is here suggested, as regards individ¬ 
ual men, is what is now occurring between banks and 
men to the amount of hundreds of millions, the pro¬ 
perty of A being lent by the bank to B, and both en¬ 
deavoring to profit of its use, thus causing the “infla¬ 
tion” of which so much is at this moment heard. The 
tendency toward this inflation is consequently greatest 
when and where unemployed capital most abounds. 

A bank being simply a shop at which money ex¬ 
changes are made, it is as harmless as the shoe shop, 
or the grocer’s shop, except in cases where, by means 
of legislative action, more power is placed in the bank¬ 
er’s hands than under natural arrangements he could 
have commanded. It is the most useful of shops, the 
money trade being the largest of all trades, and equal 
in amount to that of all other trades combined. Per¬ 
ceiving this, the men of New England allowed to bank¬ 
ing greater freedom than could be elsewhere found, 
bank charters being fi’eely granted, and provision be¬ 
ing generally made by means of which their capital 
migtit generally be increased; thus absorbing unem¬ 
ployed capital that would otherwise have remained 
unproductive to its owners under the name of “depos¬ 
its.” Asa consequence, in no part of the world, Scot¬ 
land excepted, has the local application of capital 
been so complete; in none have banks traded so much 
upon their own capital, and so little on that of others; 
in none has the circulation been so perfect or so eco¬ 
nomical; in none has so vast an amount of business 
been transacted with so little loss to the bankers, or 
to those with whom they dealt; and in none has 
there been less of that “inflation,” which throughout 
the rest of the Union has led to crises so disgraceful 
and so severe. 

Passing south and west we find more jealousy of 
bankers; more restrictions and limitations; more lia¬ 
bilities; more monopolies; and, as a necessary conse¬ 
quence, more unemployed capital in the hands of 
bankers; more over-trading; more frequent vibrations 
in the supply of money; frequent stoppage of pay¬ 
ment by tlie whole body of banks; the general result 
being that the trade in money has been thrice, and in 
very many instances ten times, more costly than has 
been the case in the New England States. 

The greater the difficulty attendant upon local in¬ 
vestment the greater, necessarily, becomes the tenden¬ 
cy toward a centralization whose results may be thus 
exhibited: 

A farmer in Illinois or Missouri, having sold his crop, 
finds himself possessor of one, two, three, or ten thou¬ 
sands of dollars, for which he has no immediate use. 
Had he a solvent bank in his neighborhood, he would 
place it there to be lent out in aid of others who might 
wish to build new houses, or cultivate new lands. 
Nothing of the kind existing, he carries his money to 
St. Louis or Chicago, to be kept in safety, subject to 
call at any moment that he may need it. The banker, 
bound to repayment at any instant, lends it to a New 
York Bank, and now three parties are exercising pow¬ 
er over the same money, and all ready to use it any 
moment that favorable opportunity may offer. The 
New York bank lends it on call to a Wall Street oper¬ 
ator, and now we have four persons controlling the 
same money, thereby" giving to §5000 the temporary 
power of $20,000- Hence arises the “inflation,” 
whose effects exhibited themselves in September last, 
when $60,000,000, which had been doing the work of 
$150,000,000, were called home to the West, very much 
of it to disappear altogether from the currency, the 
real owner preferring to lock it up in his strong box, 
rather than leave it in the hands of such banks as had 
been created by Mr. Chase. 


The great fact now presents itself, that after a nine 
years’ war upon the circulation, it remains almost un¬ 
changed—the “inflation” resulting from an use by 
banks of the unemployed capital of customers mean¬ 
while having increased fully $500,000,000. If we 
would return to the use of the precious metals, we must 
attack “inflation” where it exists, and not seek to at¬ 
tack it where it has no existence, whatsoever. 

The New England system, before the war, tended to 
facilitate the local employment of capital, and to com¬ 
pel banks to look for profits to the employment of 
their own means, and to a circulation greatly limited 
by the competition of numerous institutions desirous 
of furnishing such machinery of exchange. The 
Chase system tended, as it must always tend, to pre¬ 
vent the local employment of capital, and to compel 
banks to look for profits to the employment of the cap¬ 
ital of others placed in their hands; the profits of cir¬ 
culation to be handed over to the Treasury as compen¬ 
sation for the use of one of the worst monopolies of 
which we have had any knowledge whatsoever. 

Substituting 3.65 currency bonds for 5 percent, golff 
bonds, the Treasury could well afford to dispense with 
the collection of all those bank taxes which so largely 
tend to limit the banking business throughout the South 
and West to those miserable shaving shops which so 
much contribute toward “inflation” by paying large in¬ 
terest on deposits, and then doubling that rate in all their 
dealings with the unfortunates who find themselves 
compelled to look to them for aid. What, however, 
would be the effect of this upon the gold premium? 
Would it tend to its diminution or its increase ? Before 
answering this question, look with me at the fact, that 
France in her recent need issued thousands of millions 
of francs of irredeemable paper, which circulated side 
by side with gold, at first at a discount of 2 1-2 per 
cent., then at 1 1-2 to 1, finally at par. Why was this? 
Because France was a country in whose favor there 
was always a balance of trade, causing a perpetual in¬ 
flux of the precious metals. 


Two Recent Plans for Resumption. 

[From the Chicago Times.] 

The September number of the Banker's Magazine con¬ 
tains a letter dated May 11, 1874, from Mr. John Earl 
Williams, President of the Metropolitan National bank, 
of New York, to Senator John Sherman, pointing out a 
“short road to specie currency.” The ideas expressed 
and the plan proposed are not such as would naturally 
be expected from the president of a great national bank, 
nor will they be likely to meet the approval of the 300,- 
000 national bank stockholders in the country; but they 
will doubtless attract attention on account of their dis¬ 
tinguished source, if not on account of their intrinsic 
merit. Mr. Williams’ plan briefly outlined, is this: 

1. Take away as soon as practicable, and forever, all 
circulation from banks, and issue United States coin 
(not legal-tenders) in place of the national bank notes 
retired. 

2. Let the treasury buy up at their market value 
whatever amount of bonds deposited by the banks to 
secure their circulation the coin notes issued will buy. 

3. The coin notes and the existing legal-tenders to be 
redeemed in coin on demand at the office of the assistant 
treasurer in New York city. To this end let a coin re¬ 
serve of $150,000,000 be accumulated, by the sale of 
$100 000,000 of 5 per cent, bonds, if necessary, in the 
treasury vaults in New York. 

4. Let Congress “authorize the emission of a con¬ 
vertible and reconvertible bond, bearing three, four, or 
even five per cent, interest.” These bonds to be ob¬ 
tained at the office of the assistant treasurer in New 
York at par for currency, and to be payable at the same 
place, with accrued interest, on demand, in currency. 

5. Let the amount of currency to be issued, and also 
the increase from time to time, “to meet the growth in 
population and business,” be determined by “a com¬ 
mission carefully selected.” 

It will be observed that in some respects the plan 
strikingly resembles a scheme suggested last June, by 
Mr. Wm. M. Grosvenor, of St. Louis. Mr. Grosvenor, 
like Mr. Williams, proposes to substitute United States 
coin notes, not legal-tender, for bank notes, and to pro¬ 
hibit the issue of any notes for circulation except treas¬ 
ury notes. But Mr. Grosvenor proposes to make these 
coin notes payable in ten years, while Mr. Williams 
proposes to make them redeemable on demand as soon 
as the treasury has a coin reserve of $150,000,000. 
Both gentlemen propose to purchase the security bonds 
of the banks at their market value, as far as the notes 
will go; but Mr. Williams estimates a saving of $39,000,- 
000 annually to the tax payers by this operation, while 
Mr. Grosvenor estimates the saving more correctly at 
about $17,000,000. Both gentleman would provide a 
mode of contradiction by the issue of bonds, but differ 
as to the mode. Mr. Grosvenor would make the gold 
notes receivable at the treasury at par for 5 per cent, 
coin bonds, and destroy one-tenth of all the notes so re¬ 
ceived until the paper should be contracted to par. Mr. 
Williams would issue a currency bond for the purpose of 
locking up notes if they should be too plentiful, and 
letting them out again if they should become too scarce; 


but he doesn’t seem to have made up his mind exactly 
what rate of interest to name in order to give the bonds 
this steam-governor sort of power over the volume of 
currency. Both gentlemen hold that the volume of 
currency should in some way be adapted to the require¬ 
ments of business. But Mr. Grosvenor thinks that the 
volume will follow the demand if specie is given a fair 
chance in circulation, while Mr. Williams would invoke 
the services of “a commission carefully selected,” and 
a convertible bond bearing some rate of interest, not too 
high, nor yet too low. 

Notwithstanding Mr, Williams 7 great experience and 
high reputation as a banker, the Times is inclined to 
give the preference to Mr. Grosvenor’s plan. Both are 
alike in proposing a paper circulation all of one kind, 
all issued by the United States, and redeemable on de¬ 
mand in coin; and both are alike in that they would 
effect a considerable saving on account of interest 
on the public debt. But Mr. Grosvenor’s plan is supe¬ 
rior in other respects, because it relies simply and im¬ 
plicitly upon the laws of trade to regulate the supply of 
circulating medium, while Mr. Williams’ relies upon 
the judgment of a commission, and the untried force 
of a regulative bond. 

Mr. Williams says some true things in his letter, and 
says them well. For instance, he characterizes the 
Suffolk bank system as “the most unmitigated paper 
scheme ever devised,” under which “millions of bank 
bills were redeemed without using a dollar of specie.” 
And he adds: “ ‘Free banking,’ too, is a catchword and 
a delusive snare, for it would give too much or too little 
currency —entirely dependent on the profit in making it." 
And he might have further added that the profit of 
making it, under our system, would be entirely depend¬ 
ent on the whim of Congress. Many other things he 
says truly, such as that the banks have no right to issue 
circulation under the national system, but only a priv¬ 
ilege, of which Congress may deprive them whenever 
it pleases. Indeed, the letter, as a whole, is an expres¬ 
sion of advanced and liberal thought, such as would not 
have been expected from one of the most prominent ben¬ 
eficiaries of our paternal banking system. It will serve 
the cause of progress by provoking discusion, if nothing 
more. 


What a New York Skeptic Says. 

[From the N. Y. Economist.] 

Nothing may be regarded as more certain than that 
there will be-no substantial change in the currency 
and financial laws for five or possibly ten years to 
come. A large proportion of the financial resolutions 
now spread out at the political conventions may be re¬ 
garded as so much buncombe. Some are honest and 
mean what they say. But the greater part are brought 
forward by the wire-pullers to hood-wink and deceive 
the people. The old platform platitudes about the 
duty of resumption, the moment it can be effected so 
as to promote the credit of the country are made to do 
duty year after year, and voters think that in some 
vague way they may lead to a restoration of the good 
old times of hard money. 

Now the reason why resumption is not likely to take 
place during the next four or five years is apparent 
enough to the politicians, but may not be so clear to 
the general reader. In the first place, the present 
Congress has tried its hand at the finances and burned 
itself so badly that it may be absolutely relied upon 
not to touch the subject. Besides, it will have no 
time to do so, even if it should be so inclined: It 
meets the first week in December and expires.on the 
4th of March next. This practically leaves a session 
of only six or eight working weeks, which certainly 
ought to be devoted to the consideration of the vari¬ 
ous departmental and routine measures which are too 
often hurried over with a degree of haste which opens 
a wide door for fraud. 

As for the new Congress to be elected this fall, it 
cannot inspire any very hopeful feeling. The candi¬ 
dates do not seem to be called from any higher so¬ 
cial or economic grade, and seem to represent the av¬ 
erage dullness of the people more than anything else. 
Well, tins new Congress, the XLIVth, will not meet 
until December, 1875, in what is called the “long ses¬ 
sion,” continuing usually until June and July. From 
December to July there would seem to be plenty of 
time for financial legislation. But members, to use 
a vulgar phrase, “will have other fish to fry.” A new 
President of the United States will be nominated and 
elected in 1876, and members will only touch financial 
or other questions so far as their action is likely to af¬ 
fect the Presidential canvass. This would throw finan¬ 
cial legislation and resumption over until 1877-78. 
The fact is, both the great political parties'are a little 
afraid of resumption and its consequences, and each 
would gladly throw the responsibility of that event on 
its opponents. It is just possible that a sudden in¬ 
spiration may seize one or the other of the political 
parties and lead to the adoption of a hard money plat¬ 
form and candidate, which may sw r eep the country. 
But a contingency of this kind is almost too good to 
be realized. The tendencies of affairs are all in the 
direction of mediocrity. 












































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FINANCIAL RECORD. 

“"WE NEED ONE THING BESIDES MORE MONEY, AND THAT IS BETTER MONEY.”—Senator Each. Chandler. 


VOL. I. 


FRIDAY, OCTOBER 2, 1874. 


NO. 35. 


Tlie Financial Record will be continued until further no¬ 
tice, and will be sent free of postage, to all persons who will re¬ 
mit 50 cents to the publishers. All editors who receive it are 
invited to send their papers in exchange. It will no longer be 
ublished by the American Social Science Association, 
ut for the present, as heretofore, communications respecting 
it may be addressed to the Secretary of the Association, F. B. 
Sanborn, No. 5 Pemberton Square, (Room 21,) Boston; and all 
exchange papers, public documents, etc., may be forwarded to 
the same address. 


Speeches and Platforms. 

The most important political event of the past week 
is the speech of Senator Schurz at St. Louis, which, so 
far as it relates to the currency question, we shall 
give our readers. It is one of the clearest and strong¬ 
est presentations of the subject yet made; deriving 
additional value from the fact that it is really an at¬ 
tack on the platform of the party the Senator is sup¬ 
porting. Although his re-election to the Senate de¬ 
pends on the success of the people’s party in Missouri, 
he will not, even by silence, seem to support the finan¬ 
cial heresies that party has approved. Two or three 
points made by the speaker deserve particular atten¬ 
tion: first his conclusive answer to the claim that 
Missouri needed more bank circulation. By official 
figures he has absolutely proved that there is no such 
demand, that not a bond has been sent from Missouri 
and deposited with the treasury, to secure circulation, 
since the act of June 20 was passed, and that §1,000,- 
000 of currency has been withdrawn by banks in that 
State in excess of all that has been applied for. Again, 
the position that the farmer suffers most of all by the 
deprecia ion of irredeemable paper, is most cogently 
argued out. His illustrations of how the farmer’s 
candle is burned at both ends, are perfect. And finally, 
his enlistment of good morals in the cause which rea¬ 
son and experience both show to be wise, his refuta¬ 
tion of the idea that the East would profit by resump¬ 
tion at the expense of the West, and his exhibit of 
the connection between specie payments and good na¬ 
tional credit, and between inflation and repudiation, 
are worthy of the most careful attention. 

Hon. Job E. Stevenson has been nominated for Con¬ 
gress by the Republicans in one of the Cincinnati dis¬ 
tricts. His position is not quite so sound as we could 
wish, for it lacks boldness in applying the remedy for 
confessed evils, but it is firmly against inflation, as his 
recent speech shows. He says: — 

It has been the purpose of each admnrstration and 
the desire of all sound statesmen to raise the green¬ 
back currency to par with coin—to make it as good as 
coin. It once touched ninety-t'our per cent., fell back 
again, and has long floated at about ninety per cent., ris¬ 
ing and falling like mercury in a thermometer. It should 
not be left in this fluctuating state. The greenbacks 
are the people’s money, and the welfare and honor of 
the people, and the good faith of the Government, re¬ 
quire that they b# made convertible into gold and sil¬ 
ver. I long for the day when American currency shall 
be as sound as American coin, when it will go with the 
flag it was made to sustain, over the seas and around 
the world, and be welcome wherever it goes. Of course 
we must proceed with great care, after full considera¬ 
tion, and by gentle, slow and steady steps, Let us 
take no step in the wrong direction, but stand firm un¬ 
til we are assured we can proceed with perfect safety, 
and when we move let us cushion our machinery am¬ 
ply and deeply with that gentlest soother of things— 
time. If it be certain that when we do move we shall 
move in the right direction, that will be in itself as 
good as a step in advance, for men will act on that 
basis. And it is already certain, because both parties 
have taken this hard money ground—the Republican 
party, almost without exception, and the Democratic 
everywhere, save in Ohio and Indiana, and perhaps in 
two Western States. The Liberal and Independent 
parties had occupied the ground, and hold it firmly. 
These outside parties, which are wholesome correctors 
of the regular organizations, have been largely instru¬ 
mental in bringing us up to this position. 

The Democrats of Ohio and Indiana have already 
lowered the flag of repudiation, and are gently furl¬ 
ing the banner of inflation. They see the grand arm¬ 
ies of honest men marching against them from all 


quarters. They feel the frown of Christendom. They 
know that the contest is vain and hopeless. The bat¬ 
tle is lost. But here in Cincinnati, under their great 
newspaper author and advocate of these doctrines, 
the Hamilton County Democracy gives desperate bat¬ 
tle. Their Convention, plunging into space far beyond 
the State platform, demands more irredeemable paper 
now. How much more do they want ? Who can tell 
what floods would be required to satisfy that crowd ? 
They never would be content until they could wade 
and swim in a sea of greenbacks. Enough to flood 
them would drown the world. If they had their wild 
way, what would become of trade, commerce, manu¬ 
factures, labor, property ? Who could forecast the 
consequences ? This much we know, that the cur¬ 
rency we have would lose all value. It would perish 
as by magic in the pockets of the people, or vanish in 
our hands. It would be paralyzed and useless for busi¬ 
ness. Our national credit would sink beneath con¬ 
tempt. Our bonds and securities would be forced on 
the market. Our creditors would demand immediate 
payment, and we should go into individual and national 
bankruptcy. Then would ensue what these men seem 
to desire—repudiation. 

Dan Voorhees has made another speech in which he 
denounces “the dishonesty and folly of the specie 
payment plea,” and the “infamous act” by which the 
country agreed to pay its debt. The speech calls for 
no comment, the Indiana Democrats having already 
“moved on,” refusing to sit in the shade of the “tall 
sycamore of the Wabash.” 

There have been no very important platforms con¬ 
structed during the past week. The Nevada Republi¬ 
cans have declared for specie payments, as everybody 
knew they would. We have besides, some half dozen 
or more congressional platforms in various districts 
East and West, all taking the same ground with great¬ 
er or less distinctness, and including expressions by all 
the parties. The only one of any particular interest, 
is in the 20th Ohio district, where, as in some other 
districts in the same State, the repudiation plank of 
the State platform was ostentatiously ripped up, and 
thrown away. Mr. Henry B. Payne, who was nomi¬ 
nated, made a speech of acceptance in which he 
said: 

As to matters of National concern, a question has 
been raised, and I am glad that you have manfully 
met it here to-day, whether the National debt may not 
be paid in greenbacks. Now, whatever might have 
been the interpretation of the law under which that 
debt was created, Congress, in 1869, solemnly pledged 
the credit of this nation that the principal and interest 
of these bonds should be paid in coin, and with that 
consent, in that pledged faith, the present holders of 
the bonds confide, and without their consent to change 
the mode of payment would be national repudiation 
and dishonor. [Applause.J Again, as to the resump¬ 
tion of specie-payment. There is no difference of 
opinion as to the desireableness of it and the policy of 
it, but there is a difference as to the time and the man¬ 
ner in which it shall be accomplished. The President 
of the United States prefers to name the 4th of July, 
1875. There is no necessity for such precipitate action, 
and it would unavoidably result in bankrupting three- 
fourths of the busicess-men of this country, and in¬ 
volve theha in hopeless ruin. 

It appears to me that the progress towards that end 
should be gradual, carefully and wisely considered, 
but steadily advanced, that the goal of specie-pay¬ 
ment should be fixed and kept in the sight of the na¬ 
tion, and approach to it should be made in a manner 
allowing time and notice, that the affairs of the coun¬ 
try may become adjusted, that the end may be reached 
without bankruptcy and without alarm, and with ample 
preparation, so that when reached, may be held secure¬ 
ly and forever. Upon these and other questions of na¬ 
tional importance it appears to me that a member of 
Congress should be governed by his conviction of what 
is right and of what his duty is, rather than by whether 
the proposition originated with a Republican or Demo¬ 
crat. [Applause.] That he should feel at liberty to 
oppose or condemn, without any partisan spirit or 
party purpose. His actions should not be controlled; 
but, looking to the general good and welfare of the 
country, I would give to the .President and to the Ad¬ 
ministration praise where praise was merited; I would 
not withhold from Democrats or Administration men 
censure where censure was deserving. [Applause.] 
Amid this enormous tide of corruption and abuse 


| that has invaded and scandalized the public service, 
I would unite with good men of ail parties in unmask¬ 
ing, denouncing, and punishing official delinquency 
and corruption. [Applause.] 


Resumption in England and America. 

To the Editor of the Financial Record : 

I see by your comments in the Record of Septem¬ 
ber 18th, on a speech of Mr. Pendleton’s, that he 
measures the inflation of prices by the premium on 
gold, a persistent error, which has been repeatedly 
exposed. “He told his hearers that everything would 
be reduced in price ten per cent, by specie payments.” 

It is worth while to say, that this notion was enter¬ 
tained and urged by the celebrated economist Ricardo, 
when the matter of resumption was under discussion 
in England from 1817 to 1821. “It is but a question of 
three per cent.,” he said, referring to general prices, 
because that happened to be about the premium on 
gold at the time. 

In 1821 the Bank of England resumed money pay¬ 
ments, having reduced its current deposits from £14,- 
850,000 in 1814, to £9,000,000 in 1817, and £4,421,000 
in 1820, with no corresponding reduction of its circu¬ 
lating notes. A prodigious fall of prices took place 
immediately, although the premium on gold had been 
but 2 and 1-2 per cent, the four preceding years, ex¬ 
cept 1819, when it was 4 per cent. Real estate appears 
to have declined more than any other description of 
property. Doubleday mentions an instance in which 
an individual had purchased two valuable estates, one 
for £72,000, paid in full, and the other for £60,000, 
of which he paid £18,555, granting a mortgage for the 
remainder. This mortgage swept from him both es¬ 
tates, the proceeds of both being insufficient to dis¬ 
charge it. In 1823 the sufferer petitioned Parliament 
for redress, setting forth, very truly, that his losses 
were the result of the action of government, adding 
that “his father had died of a broken heart, and he 
himself is a ruined man, with seven children of his 
own, ten of his brother’s, and seven of his sister’s, all 
dependent on him.” Of course his petition brought 
•io relief, for similar cases were numerous, and all 
debtors suffered more or less from the same cause. 

Gold in the United States takes rank with other 
exportable commodities, and its price in paper or bank 
medium is determined precisely like the price of cot¬ 
ton, or wheat, or provisions, which cannot be main¬ 
tained for any considerable time above the rate that 
will yield a shipping profit. Whereas real estate, and 
all things which depend for their value on home use, 
exclusively, are left in price to the rack and stretch of 
our spurious currency, which expands in the inscribed 
credits of banks, varying more or less in mischievous 
power, by the varying activity of circulation, under 
the specious name of “deposits.” It is very useless to 
argue the currency question without placing these so- 
called deposits in the same category as bank notes. 
The history of the Bank of England, and of banks 
and financial crises everywhere, teaches this lesson. 
A deposit is the same thing in principle and effect, 
whether certified in a bank note, or recorded in a bank 
ledger, the potential thing which circulates being the 
fund in bank, whether money or moonshine. 

Mr. Pendleton is unexpectedly moderate in his esti¬ 
mate of the fall of prices by specie payments, and 
altogether mistaken in supposing that the premium on 
gold bears any mathematical relation to the present 
inflation. I am paying for some things in my family 
expenses 100 per cent, above the price of the same in 
1861—fine shoes, for example—and other things which 
do not appear in the published price current of the 
market. The wages of house service, and of labor 
generally, have advanced in a similar ratio. No ten 
or twenty, or probably thirty per cent., will cover the 
fall of average prices that will take place in the re¬ 
sumption of money payments, under such propor¬ 
tioned relations of capital and currency as exists at 
present; and whoever lives to see that day, will first 
see the current bank deposits sink in this country, as 
they sank in England between 1814 and 1821, although 
real invested deposits, such as those in savings banks, 
which do not perform the function of currency, may 
increase. 

Over and over again the British Parliament enacted 
that specie payments should be resumed at some speci¬ 
fied time, and over and over again, as the time ap- 





















THE FINANCIAL RECORD. 


119 


proached, every such enactment was repealed, until, 
by the curtailment of bank loans and “deposits,” the 
mixed currency was reduced below the normal money 
volume, and money was thus raised in exchange value 
higher in London than in foreign markets, when there 
was no occasion to consult Parliament; and, although 
by the act of 1819, resumption was not required till 
1823, it took place in 1821, under the lead of the Bank 
of England. 

I say, then, the banks control the currency, and the 
matter of resumption rests with them, especially the 
banks of New York city. While greenbacks, bank 
notes and demand deposits are interchangeable, gov¬ 
ernment cannot resume on the greenbacks, unless the 
banks shall contract their current deposits to the same 
amount which they would naturally hold if their de¬ 
mand liabilities were covered, dollar for dollar, with 
gold and silver. This point can only be determined 
by the fact that greenbacks and bank media, under an 
average rapidity of circulation, will command sterling 
right exchange in New York at 486.65 cents to the 
pound, or something less. Until then, our whole cur¬ 
rency will remain degraded below the normal money 
value, and a general resumption of money payments 
is impossible. Until then, our gold will be degraded 
and exported because of its degradation, the “balance 
of trade” having nothing to do with it. 

This, you will understand, is not intended for an 
argument against specie payments. I am not only for 
specie payments, but for a specie currency, which the 
banks would borrow and lend without limit, and which 
would extend the business of banking to many times 
its present dimensions by superseding other methods 
of credit. This can be reached without disaster, and 
much more easily than specie payment of the existing 
currency, which, indeed, in my view, is impracticable. 

Sept. 24 1874. C. 

The Legral-Tender Act. 

WHAT A MASSACHUSETTS CANDIDATE FOR CONGRESS 
SAYS OF IT. 

• Prof. J. H. Seelye of Amherst college, is an Inde¬ 
pendent Republican candidate for Congress in Massa¬ 
chusetts. In a speech made Sept. 29, he thus speaks 
of the Legal-Tender act: 

I think any one who looks at the matter honestly is 
obliged to say that this whole legal-tender business 
was one of the greatest mistakes, if not the greatest 
mistake, of our war. Just look at it; see what it lias 
done. This same legal-tender act has increased our 
national debt more than 1000 millions of dollars; uhas 
swoolen prodigiously all over our state, town and coun¬ 
ty indebtedness; has augmented our taxes, increased 
the expenses of living, encouraged unthrift and extrav¬ 
agance in the government. Worse than all that, it has 
poisoned the minds of the people by familiarizing them 
with the promises of a government that doesn’t keep 
its promises, familiarizing them with these promises 
and obliging them to use them as though they were 
good and true. And 1 say this only needed the addi¬ 
tion of a decree of the Supreme Court of the United 
States making it the law of the land to make it the 
heaviest and the greatest of all the mistakes made in 
that period of our national life. In the spring of 1870 
the question came before the court as to the constitu¬ 
tionality of the legal-tender act in its application to 
debts contracted before its passage. The Supreme 
Court decided, as any honest body must, that it was 
not applicable to such cases. Contracts made when 
gold was the legal currency should be paid in gold. 
Any honest eye can see that is plain justice and law, 
and so it was decided by a majority of four to three. 
But what was the action of our wise law-makers at 
Washington thereupon ? There were prodigious inter¬ 
ests at stake. All of our great railroad corporations 
by this decision had got to pay their bonds in gold. 
So Congress passed an act increasing the number of 
the Supreme Court judges from seven to nine. Gen. 
Grant appoints to till the two places thus made a judge 
who, in an inferior court, had already pronounced an 
opposite decision to the above, and a man who was the 
paid attorney of the Pennsylvania Central Railroad. 
Then followed the reversal of the former decision of 
the Supreme Court, by a majority of five to four, to 
the effect that the act was constitutional, and tills is 
the way we stand now. 


A Conversion. 

The St. Louis Democrat , which, last spring, was an 
inflationist journal, has experienced a change of late, 
endorses Senator Schurz’s speech, and now says: 

Last year it was believed by many very intelligent 
men, even in some well-informed financial circles, 
that the disturbance of industries was either caused or 
in some way aggravated and prolonged by a deficiency 
in the volume of the currency. But it is now gener¬ 
ally admitted that the events which have since oc¬ 
curred completely disprove that idea. For weeks be¬ 


fore the adjournment of Congress, money was a drug 
in the market, and it has been plenty everywhere 
since, and yet no revival of business occurs. Since 
the new currency bill went into effect, which, as Sena¬ 
tor Morton said, unlocked §44,000,000 than imprisoned 
in bank vaults, we have not seen any escape of that 
imprisoned currency, but, on the contrary, there has 
been some contraction in the circulation through the 
voluntary action of the people themselves. As Sena¬ 
tor Schurz showed by a letter from the Comptroller of 
the Currency, though this State has had the opportu¬ 
nity since June 20th to take over $9,000,000 more of 
bank currency than it had before, it has not yet taken 
a single dollar, but has voluntarily surrendered $1,- 
600,000 of the currency it then possessed. The secret 
of business stagnation must be sought in some cause 
far more potelit than these. Its essential feature is a 
general reduction of consumption, which, combined 
with an excess of productive capacity in many branch¬ 
es of industry, has made prostration severe and pro¬ 
longed. The reduction of consumption is in part also 
an effect of the prostration of industries by which 
many persons have been thrown out of employment. 


Spirit of the Press. 

[Hamilton, (Ohio) Telegraph.] 

The Republican party is to be condemned for its 
lethargy and timidity in meeting the demands of the 
times for a sound currency, a fixed standard of values. 
All the more should it be held responsible for this timid¬ 
ity, because from its birth it had been a party of cour¬ 
age and devotion to principle. Our Ohio platform 
gives one of the cheering indications that the day of 
equivocation is over, and the time for plain speech has 
come. After denouncing every form of repudiation, 
and demanding payment of all national obligations in 
coin, it lays down a policy asfoilows: “It is the duty 
of the national government to adopt such measures as 
shall gradually but certainly restore our paper money 
to a specie standard.” This has a positive and clear 
meaning. It has a well defined and intelligible pur¬ 
pose. It calls for action; it recognizes principle. We 
hail it with delight as the harbinger of an era of integ¬ 
rity and security to business—an era of safety and en¬ 
during prosperity. The Republican party has taken 
the position which from the first was inevitable,'which 
should have been taken long ago, and long since should 
have produced action. The delay has been an injury 
to the Republican party and wrought damage to every 
interest in our country. 

[Indianapolis Journal.] 

If a committee of intelligent gentlemen were charged 
with the duty of selecting from amongst the public 
men of Indiana, the individual who knows the least 
about the subject of finance, they would unanimously 
pick upon Voorhees. The financial problem is one 
that requires study, and Vorhees never studied any¬ 
thing. It is exceedingly unfortunate for the honest 
advocates of an expansion of the currency, to have 
their cause disgraced by the support of a man like 
Vorhees, whose last official act was to extract $5000 
from the public treasury, under the salary-grab law, 
and whose whole public career has been a scandal to 
the politics of the country. Voorhees is the author of 
the financial plank in the Democratic State platform, 
the plank “spit upon” so vigorously by Mr. Joseph 
E. McDonald, in a speech delivered by him at Green- 
castle, a few weeks ago. Voorhees doubtless felt 
called upon to crush this disloyalty to the party “on 
the very spot of its origin,” as his distinguished 
namesake would say, and went to Greencastle to de¬ 
molish the able chairman of the Democratic State ' 
Central Committee. AVhile pretending to criticise the 
record of the Republican party on the subject of 
finance, his effort is really a blow aimed at McDonald, 
Kerr, and other Democratic advocates of the Wall- 
Street millionaires. 

[Chicago Tribune.] 

Among the Indiana Democrats, since the Illinois 
Convention, there has been a striking change. The 
Hon. Joseph E. McDonald, Chairman of the Demo¬ 
cratic State Committee, has kicked over the Indiana 
platform, and has been making speeches in favor of 
specie payments and honest dealings with the public 
creditors. The people have every where greeted him 
with their cordial approval. Candidates, emboldened 
by his success, have taken the same course, and last 
but not least, Gov. Hendricks, at a special meeting 
held at Indianapolis, has followed McDonald, and now 
repudiates the repudiating platform of the party. 
The Hon. M. C. Kerr has won new distinction in In¬ 
diana, as a man of ability and integrity by a fearless 
opposition to inflation, and advocacy of an honest pay- 
ment of the public debt. Dan Voorhees is left almost 
alone in the support of the greenback and repudiation 
platform, of which he boasts he is the author. So 
great has been the change, that in fact the Democrat¬ 
ic candidates in Indiana are now running for office on 
the Illinois platform, the In liana fraud having been 
practically abandoned. 

[St.Louis Westliche Post, (Carl Sehurz’s Paper.] 

It was a good day’s work which the Republican par¬ 
ty achieved yesterday in Jefferson City. The fruits 
wid appear already in a few days, and long before the 


| November election it will be apparent to any unpre¬ 
judiced mind that the Republicans, Liberal Republi¬ 
cans and Liberal Democrats, now united in the Peo¬ 
ple’s party, are in a very large majority as opposed to 
the Bourbons. We should not be surprised, indeed, 
if we were to carry St. Louis County by 12,000, and 
the whole State by 75,000 majority. Of course, such 
a glorious result presupposes that every good citizen 
should do his dutj r faithfully. Let no one neglect it 
from now until the 3d of November. 

[St. Louis Democrat.] 

We do not wish to forestall, by any remark or 
criticism, the impression which the speech of Senator 
Schurz may make. It deserves to be carefully read, 
and, notwithstanding its length, will prove well worthy 
of examination. If we cannot in all respects assent 
to its positions we shall find much that deserves the 
most emphatic approval. But none who were present 
last night can question the significance of the gather¬ 
ing which greeted the Senator, and not only filled the 
hall to overflowing, but waited through hours which 
few speakers could have rendered equally entertain¬ 
ing to hear his opinions. That a very largfe number of 
the citizens of St. Louis feel a great interest in his 
utterances will not be denied. Even those who dis¬ 
sent from him most widely feel that his expressions 
have a national importance, and there are thousands 
who welcome him as a Senator of whom Missouri has 
every reason to be proud. 

[Cincinnati Gazette.] 

The Ohio and Indiana Democrats have been hand¬ 
somely snubbed by the Democrats of nearly every 
other State, and notably by the Democrats of Penn¬ 
sylvania and New York, on the currency question- 
While Ohio and Indiana resolved in favor of repudia. 
tion and inflation, the other States decided in favor of 
honesty and real money. The road to power does not 
lie through mountains of inconvertible paper money 
and repudiated obligations. The majority of Demo¬ 
cratic Conventions see this, and favor the honest 
course.. 

[Memphis Appeal.] 

The Appeal quotes this from a letter written some 
time ago by its Nashville correspondent: “It is now 
evident that the volume of currency will not be en¬ 
larged during Grant’s administration, if it ever should 
be The question is presented, What shall we do to 
make up for this want of currency ? There is in this 
question, it seems to me, but one remedy—let us learn 
to do with but little money by raising our own sup¬ 
plies. A farmer who raises on his farm everything he 
needs, has but little use for money. Let us make our¬ 
selves independent of New England and New York 
politicians and people who forced upon us this money 
stringency in order to benefit Eastern and New York 
bankers and bondholders.” The Appeal considers this 
a very wise suggestion. It goes so far as to admit 
that “it' the bondholders would reduce their debt as 
they reduce the volume of currency, then it would be 
more just and fair.” But inasmuch as the greedy 
pigs of bondholders will not do that, and even have 
the impudence to demand pay in coin instead of green¬ 
backs, the only thing to be done is to “reduce our 
purchases and rely upon producing at home what we 
need.” The Appeal adds sympathetically that this 
might not be particularly agreeable to the merchants 
and traders of New England, but as much as it might 
hurt them it must be done as the only remedy for cur¬ 
rency restriction. 

[Chicago Times.] 

If the sage counsels of the Appeal are followed, the 
solitary horseman who shall have the hardihood to 
penetrate the wilds of Tennessee ten years hence, 
will find the natives chopping with stone axes, scratch¬ 
ing the soil with wooden plows, and shooting one 
another with bows and arrows. Obviously what is 
good for Tennessee is good for the rest of the West 
and South, and we may expect to hear the Logans and 
Richardsons, the Oglesbys and Singletons of Illinois 
advocating the non-intercourse policy at no distant 
day. Such progressive statesmen cannot consent to 
stay in the rear, and leave Tennessee to enjoy alone 
the manifold blessings of the troglodyte system of civ¬ 
ilization. We may expect Mr. Logan to bring in a 
bill, next winter, to make money plenty in the West 
and South, by dispensing with the use of it altogether 
and leaving the bloated bondholders of New York and 
Ne \ England to enjoy the blood-sealed greenbacks all 
by themselves. Probably he cannot devise a better 
way of cutting adrift from the specie basis, and every 
other basis at the same time. 

[N. Y. Journal of Commerce.] 

The country cannot prosper while the disintegrating 
falsehood that a promise is a dollar runs through the 
warp and woof of all commercial affairs. The politi¬ 
cal economists of all schools have taken a turn at the 
problem, but the legal fiction is the insoluble element. 
We have no objection to the promise of convertibility, 
nor to the experiment of the offered exchange if any 
choose to try it; but in the meantime let us remove the 
one great sin of our financial policy, and leave the prom¬ 
ise after a given day to stand or fall by its own weight. 
In our judgment scarcely a ripple of trouble would fol¬ 
low such a repeal, but the relief would be felt like the 
thrill of returning health to the remotest fiber of the 


















THE FINANCIAL RECORD. 


120 


body politic. The great business of the country would 
still be conducted by checks, transfer of credit, private 
promises and bank notes, but the thing represented and 
promised would be areal, tangible, substantial acquisi¬ 
tion, and not a legal fiction, as variable in its altitudes 
and depressions as the mercurv in a thermometer. 
The incubus which hangs around the neck of enterprise 
and paralyzes the hand of industry is the legal tender 
fiction that a promise is a dollar. Let us repeal the act 
which enforces it, and have done forever with that 
monstrous, blighting falsehood. 

[Jacksonville (III.) Journal.] 

The fact is that we are experiencing the natural re¬ 
action from a period of wild speculation—we are pay¬ 
ing for the brief luxury of having an unlimited paper 
currency. Everything has been unnaturally inflated; 
now the reaction has come and we all suffer. As for 
the farmers, they ought to fall on their knees and be 
thankful that while manufacturers and merchants and 
speculators, all over the country, are harassed by day 
and night with losses and debts, and many see ruin 
imminent, the farmer—except in rare cases—while he 
feels the pressure in common with all, can at least 
rest sure of food and clothing and shelter for himself 
and family. 


CARL SCHURZ. 


Another Great Speech on the Currency. 


Made at St. Louis, September 24. 

The financial problem, as it presents itself to us, 
is riot one of political economy alone, but it involves 
questions of public morals, of political power, and of 
good understanding between the different sections of 
the country. It is a somewhat dry subject, and I 
must fall back upon your patience in briefly discussing 
its different aspects. In September of last year a 
financial crisis broke out, and, as soon as the first 
failures had taken place, and a panic set in, business 
men, especially bankers and financial operators, at 
once rushed to the national government for aid. They 
represented, and, indeed, a great many persons thought, 
that if the government would only put more paper 
money in circulation, the panic would at once subside, 
and the disturbed condition of business would be set 
right again. By a purchase of bonds, about §14,000,- 
000 were set afloat by the government, most of which 
went at once into the savings banks, and was locked 
up, and produced no effect at all. Still, this appeal 
of merchants and financial men, under the bewilder¬ 
ing influence of a panic, was not unnatural and ex¬ 
traordinary. But soon the theory that it is the office 
of government to regulate the financial and general 
business concerns of the people in such a way became 
quite popular, and it is preached in a most startling 
form by those whom we call inflationists. Let us 
examine that theory and see what it means. 

COIN CURRENCY AND RAG MONEY. 

In specie paying times, when gold coin was the basis 
of our financial system, and bank notes were redeem¬ 
able in coin, the quantity of currency in circulation 
was regulated by the requirements of business; that 
is to say, when more money than we had in circula¬ 
tion was needed for the business transactions going on. 
gold flowed in from abroad, or, coming from the mines, 
remained here in larger quantity, instead of going 
abroad, and the banks put afloat larger issues of notes 
redeemable in gold. When less money was needed 
for those transactions gold went abroad in larger quan¬ 
tity, and bank notes flowed back to the banks for re¬ 
demption. The reason is that gold appears not only 
in the character of money, but also in the character 
of a commodity, of merchandise which has its value 
the world over. As an article of merchandise gold 
will, like other merchandise, flow in or withdraw as 
the market is good or bad; that is to say, when much 
gold is needed, to be coined into and used as currency, 
it will command a good price in other commodities; 
it will withdraw from less favorable markets and pre¬ 
sent itself for purchase; and; in the opposite case, it 
will go to some other place, where it finds more favor¬ 
able conditions. This self-regulating ebb and flow 
may be slightly and temporarily disturbed by violent 
revulsions or artificial operations, but in most cases 
the disturbance is only apparent; it is always short, 
and the general rule holds good. Thus, the quantity 
of specie in circulation—and, with a well ordered bank¬ 
ing system, as it should be, the bank note circulation 
also—is, in specie paying times, regulated by the cir¬ 
cumstances of business. The government has no ar¬ 
bitrary control over it; it has only to see to it that the 
coin struck in the mints has the fineness and weight 
prescribed by law, that counterfeiting be properly pun¬ 
ished, and that the banks be so regulated as to make 
them safe. 

But the substitution of an irredeemable paper cur¬ 
rency for a metallic basis changes all this. Bow does 
that operate ? Examine its history in the United States. 
In the extreme stress of the war, our government sus¬ 
pended specie payments; that is to say, it gave tor 
what it had to buy, and to those whose labor or mili¬ 


tary service it employed, no longer gold and silver, 
but its notes, its promise to pay, its due bills, and 
these due bills it made by law a legal tender in the 
payment of debt. These legal tender notes became 
the currency of the country, and as an inferior cur¬ 
rency, one of uncertain value, always drives out the 
superior one, coin ceased to circulate. The precious 
metals Lst their employment as a medium of exchange, 
and flowed out to other countries where they were still 
so employed, and found a market. From that time the 
self-acting laws of trade ceased to regulate the quan¬ 
tity of currency in circulation. And another regulator 
is substituted to determine that quantity, namely, the 
arbitrary will of the government. In our case Con¬ 
gress has to fix by law the volume of the circulating 
medium the country shall have. That volume, once 
fixed, remains rigidly the same, whatever the require¬ 
ments of business may be, until Congress changes it by 
law, and then it remains rigid again. But is not Con¬ 
gress able to adapt the volume of currency to the busi¬ 
ness requirements of the country ? I unhesitatingly 
say that Congress has not and never will have that 
ability. It would not have that ability were it com¬ 
posed of the most sagacious financiers of the land. 
The reason is, first, that the requirements of business 
are continually changing from month to month, al¬ 
most from day to day; and secondly, that no man has 
ever been able to estimate with any degree of accura¬ 
cy how much currency the business of any country 
does require under any given circumstances. We 
know only that when there is more than is required of 
an irredeemable paper currency it will depreciate, and 
when there is too little to effect the necessary ex¬ 
changes, the precious metals will flow in to fill the 
vacuum. But Congress, I say this without any disre¬ 
spect, has been so far from being composed of the 
best financial minds of the country, as not even to 
know that. It may be taken for granted, therefore, 
that in adapting the volume of currency to business 
requirements Congress will only follow wild guesses. 
But it is of the highest importance that such guesses 
should not be wrong, for if they are wrong, issues of 
paper money made upon them will seriously affect 
all current values in the country. For instance, if 
more currency is issued than business really requires, 
the currency, as it has done, will depreciate as to gold, 
and the prices of commodities will be inflated. Thus 
the purchasing power of every dollar of paper money 
in the hands of the people, as well as the cost of fill¬ 
ing every contract, and the value of all things you 
have to buy and to sell will be changed by act of Con¬ 
gress. In other words, the value of the private prop¬ 
erty of every citizen in the oountry will be absolutely 
at the mercy of an arbitrary act of the government. 

THE POWER OF THE GOVERNMENT. 

I invite you calmly to consider the nature of the 
power which the government thus exercises. To in¬ 
crease or diminish at will the purchasing power of 
every dollar you hold in your possession! To run up 
or down the price of every article of merchandise you 
have to sell! To make smaller or larger the size of 
every piece of bread and meat you are able to buy for 
your families 1 To make ruinous either to yourselves 
or the parties with whom you have contracted, the per¬ 
formance of every contract you have made! To raise 
or lower the real amount of every debt you owe or due 
you! No value stable, no contract safe, no business 
calculation certain, no possession secure! Everything 
at the mercy of the arbitrary will of government! 
You ransack your imagination in vain for the concep¬ 
tion of a governmental power more wildly despotic. 
I ask you with all candor and soberness, is this a power 
which any government ought to have ? Above all, is 
this a power which a republican government ought to 
have ? But such is, such always will be, the power of 
a government that can determine at pleasure the vol¬ 
ume of the currency to be put and kept in circulation. 
And it is very remarkable and significant, that so many 
Democrats who are fond of priding themselves, espe¬ 
cially upon their fidelity to the principle, that the pre¬ 
servation of popular liberty is possible only if the 
powers of government are carefully limited, in this 
instance favor a centralization of power of the most 
arbitrary and despotic nature. Consistent Democrats 
indeed! Consider what use might be made of such a 
power if a Congress, intrusted with it, ever fell under 
the control of a ring of shrewd and greedy specula¬ 
tors ! Not only the Treasury of the government, nay, 
every citizen’s pocket would be within easy reach of 
their rapacity. But, dismissing the supposition of or¬ 
ganized roguery, the mischief may as well be done by 
error and ignorance. And there impossibility itself 
appears possible. Of the wisdom with which so tre¬ 
mendous a power may be exercised, we had last winter 
a striking illustration. The majority in Congress in¬ 
sisted that to relieve the disturbed condition of business 
it was absolutely necessary to expand the currency. 
No counterargument availed. After months of debate 
the majority succeeded in passing a bill avowedly for 
that purpose. It was a great victory of the expansion¬ 
ists. The specie payment men left them in-their illlu- 
sion. But when the bill was passed, a closer analysis 
showed that the practical operation of the scheme 
would have had the effect <jf rather contracting than 


expanding the currency. Thus it turned out that the 
inflationists, after months of debate and cogitation, did 
not even know how to inflate. The President justly 
vetoed the bill on the ground that it was an inflation 
measure in principle, although its effect might have 
been different. 

But a mistake just as greal led the majority of Con¬ 
gress to think of an expansion of the currency at all. 
The fact that a panic, a sudden scare, may be relieved 
by the banks being enabled to discount freely, made 
them believe that the stagnation of business, such as is 
brought about by a great financial or commercial col¬ 
lapse or crisis, can also be remedied by the expansion 
of such a currency as we have. Now look at the facts. 
We all know that, since the panic of last fall, the 
banks in all the commercial centers, great and small, 
and even in many country towns, have been full of 
money which sought safe investment, and was, to a 
great extent, not able to find it. I am well aware that 
there were a good many persons who could not get all 
the loans they wanted; but the difficulty in such cases 
was not that there was not a sufficiency of money in 
the loan market, but that the security offered was not 
deemed satisfactory by the lenders. But not only lend¬ 
ers, but also borrowers, had become circumspect and 
timid, and thus there remained vast quantities of mon¬ 
ey in the banks which could not find safe and profita¬ 
ble employment. In fact, many banks which in ordi¬ 
nary times deal only in commercial paper, publicly ad¬ 
vertised that they were willing to lend out money on 
real estate security on long time. Such has been the 
case in this very city. I have here an extract from 
the money article of a Chicago paper of September 19. 
It is as follows: 

“The demand for money for nearly two weeks past 
has been, for the season, of the smallest possible pro¬ 
portions. Bankers have really had scarcely anything 
to do. Nobody seems willing to borrow money if he 
can possibly help it. Economy is the order of the day 
—certainly a most healthful and hopeful condition of 
things, but it leaves the bankers with their vaults full 
of idle funds.” 

A SUPERABUNDANCE OF CURRENCY. 

All this goes to prove that there was a superabund¬ 
ance of currency far beyond the actual requirements 
of business, but at the same time a lack of confidence 
which prevented the use of it, while the majority in 
Congress insisted that the business of the country was 
starving for want of more money. Another striking in¬ 
stance of the vast and varied misinformation at the 
bottom of the expansion cry was the following: Great 
complaint was made in Congress of the advantage the 
East had over the West and South in the distribution 
of the national bank currency. That complaint was 
not unjust. But it was stated also by Western and 
Southern Senators and Representatives that those sec¬ 
tions of the country were beyond measure hungry for 
more national bank currency, and that there would be 
a ravenous rush for bank charters as soon as the law 
should be so changed as to give the West and South 
an opportunity for the establishment of more banks of 
issue. It was loudly asserted that this good State of 
Missouri would absolutely not get along without more 
national banks, more “local circulation,” and that if 
any were placed within her reach she would fairly 
jump at it. 

Well, a law was passed placing more “local circu¬ 
lation” within the reach of Missouri, but where was 
the jump ? I hold in my hand a letter from the Comp¬ 
troller of Currency, which gives the following infor¬ 


mation: 

Treasury Department, ] 
Office of Comptroller of Currency, 
Washington, September 8, 1874. 

Sir:—I have received your letter of the third inst. Previ¬ 
ous to the passage of the act of June 20, 1874, national banks 
had been authorized in your State as follows: 

Kansas City.'..§90,000 

St. Joseph. 45,000 

Mexico. 45,000 

Libe ty. 45,000 

Ste. Genevieve. 45,000 


All of these applicants have been notified to perfect their 
organizations, but thus far no steps have been taken for that 
purpose. 

Since the passage of the act, the First National Bank of Kan¬ 
sas City has been authorized to increase its capital stock to §50,- 
000,000, with additional circulation amounting to §225,000, and 
others were authorized, on the 17tli of July last, to organize a 
national bank at Shelbina, with a capital of §100,000, circula¬ 
tion §90,000. No bonds have 'been deposited by any national 
bank organized, or in process of organization, as security for 
circulation, since the passage of the act of June 20. 

The proportion of §354,000,000 of national bank circulation 
apportioned to Missouri, on the basis of population and wealth, 
is §15,459,409; the amount issued to this date, §6,160,588; leav¬ 
ing undistributed, §9,298,821; any yiortion of which may be 
distributed to organizations in Missouri, until the whole 
amount authorized by the act of June 20,1874, shall be trans¬ 
ferred from the Eastern to the Western and Southern States. 

The following national banks in Missouri have deposited le¬ 
gal tender notes since June 20, and withdrawn a proportion¬ 
ate amount of their bonds: 

St. Louis National Bank.§192,000 

Valley National Bank, St. Louis... 74,000 

National Bauk of State of Mo., St. Louis.1,333,350 


* Total...§1,599,350 

The total amount of national bank circulation outstanding 
to date is §350,656,733. 

Very respectfully, J. W. Knox, Comptroller. 

Hon. Carl Sohurz, u. 8. 8., St. Louis. 




















121 


THE FINANCIAL RECORD. 


Thus it turns out that the State of Missouri, though 
since the passage of the law of June 20, 1876, it is enti¬ 
tled to over $9,000,000 more of national bank currency 
than it bad before, over $1,000,000 more has been sur¬ 
rendered than has been applied for, between the 20th 
of June and this day; and since none of the new banks 
authorized has, by performing the legal requirements, 
enabled itself to set any currency afloat, we have in 
reality over $1,500,000 less bank currency to-day than 
we had before the passage of the act enabling us to 
have more. That is a contraction of bank currency. 
And who effected it ? Not the government, but the 
voluntary action of our moneyed institutions. It 
seems, if the government does not contract, contrac¬ 
tion effects itself where it has a chance. And this is 
the State of Missouri, which, as the inflationists said, 
stood thundering at the doors of the Treasury, vocifer¬ 
ously demanding an immediate grant of more bank 
currency, more “local circulation” for the famishing 
business interests of the people. There it is in facts 
and figures. Does it not almost seem as if those who 
insisted that the stagnation of business here was owing 
to a lack of currency, and the business interests of 
Missouri were clamorous for more currency, eager to 
take it if it could be had, were sadly ignorant of the 
matter they were speaking about—in fact, that the 
majority had no conception whatever of the actual 
condition and requirements of the business of the 
country ? By this time they must have arrived at 
that conclusion themselves. 

THE EFFECTS OF A CRISIS. 

When insisting that we needed more currency, they 
evidently did not consider that during a crisis busi¬ 
ness contracts itself; that people reduce their expenses; 
that demand falls off, and thereby production is neces¬ 
sarily discouraged; that capital becomes more than 
ordinarily timid in its investments; that enterprise 
grows very circumspect, and confines itself to the 
safest ventures; that confidence is shaken; that no¬ 
body is inclined to take any great risks, and that for 
its necessarily limited transactions under such circum¬ 
stances business requires less and not more currency 
than in ordinary times. Such is the case after the crisis 
of 1873, as it had been the case after every crisis which 
preceded it. But in one important feature the crisis 
of 1873 differed from those which preceded it. While 
in 1837 and following years, and in 1857, the crisis was 
attended by a severe contraction of the bank note cur¬ 
rency, the rotten banks breaking and their issues being 
wiped out, the crisis of 1873 did not change the volume 
of our already irredeemable currency at all. After 
the panic there was and there is just as much of it as 
there was before. Now, it may be thought at first sight 
that this is an advantage, but it is just the reverse. 
Why ? Because this circumstance does not facilitate 
the recovery of business from the collapse, but renders 
that recovery more difficult and retards it. The rea¬ 
son is simple. 

After a crisis, business struggles to re-establish itself 
upon a new, sound and safe basis. One of the first 
prerequisites of such a solid and safe basis is a sound 
currency, a currency of reliable and stable value. In 
former crises the rotten banks broke, and their notes 
disappeared. The sound banks endured the shock, 
and their notes remained good. But although the cur¬ 
rency had contracted itself, what remained of it was 
sound, and when business grew again and demanded 
more, specie flowed in and served as a basis for new 
and sound issues of bank notes. The volume of the 
currency, specie payments being restored, regulated 
itself according to the requirements of business. The 
business men of the country knew in that respect what 
they could count upon. They could base their calcu¬ 
lations and contracts and engagements upon the assur¬ 
ance that the standard of values and the medium of 
exchange used in its transactions was and would re¬ 
main certain and stable;.that a dollar was not only in 
name, but in reality, a dollar, subject to no arbitrary 
act of government. That safe and solid foundation 
being laid, the legitimate business of the country "re¬ 
covered with comparative rapidity, leaving only those 
fictitious values behind, in which windy speculation 
had been dealing; confidence revived; enterprise took 
a new start, and the country was soon restored to new 
prosperity. I am well aware that other agencies, the 
tariff and political movements, together with the cur¬ 
rency, had, and always have a combined effect upon 
the economic development of the country. But taking 
the influence exercised by the currency itself, it was 
undoubtedly such as I have stated. It was to facili¬ 
tate the recovery of business by giving it a certain and 
6table foundation on which to start and to develop. 

But what is our condition to-day ? There is the in¬ 
disputable fact that there is the same amount of cur¬ 
rency as before the crisis; that the banks have for a 
year been full of money, and that so much of it lies 
unemployed. Why is it that, even after the liquida¬ 
tions which have taken place since last September, 
the general stagnation continues virtually unchanged, 
that business can not get a new start, and does not at 
present even show a prospect of improvement ? Why 
do not confidence and enterprise revive ? 

OUR CURRENCY UNRELIABLE. * 

One of the reasons, and a very important one— 
probably the principal one—is, not that, as the intia- * 


tionists pretend, we have not currency enough—for 
there is much more than finds active employment— 
but that the currency we do have does not furnish a 
safe, stable and certain basis for a new development 
of business. Why not ? Because the volume and 
value of that currency depend, not upon the self-act¬ 
ing laws of trade, but upon the arbitrary action of the 
government. You may approximative^ know what 
it is v/orth to-day, but you do not know what it will 
be worth a month hence, and you have not the remo¬ 
test conception of what it may be worth twenty days 
after the opening of the next session of Congress. It 
has not the element of stability which is required to 
give the necessary degree of certainty to business cal¬ 
culations. It depends upon the arbitrary will of a 
power whose decisions in such matters can be foretold 
as little as the verdict of a petit jury in a breach of 
promise case. If an importer orders a lot of goods in 
Europe to-day, when one dollar and ten cents in green¬ 
backs bring one dollar in gold, he may at the time his 
payments come due hare to pay for one dollar in gold 
one dollar and thirty cents in paper. If a merchant sells 
a bill of goods to a customer on ninety days time, green¬ 
backs may be worth 20 per cent, less when the payment 
comes in than when the sale was made. If a builder 
makes a contract for erecting a block of houses to-day 
on a calculation of the prices of material and labor, 
based upon greenback value to-day, lie may be utterly 
ruined by the change in the purchasing power of our 
paper money ensuing when Congress passes its next 
currency bill—and so on through the whole chapter. 
Business, especially when struggling to get a new 
start after a collapse, wants firm ground upon which 
to stand; but now the ground is so earthquaky that 
scarcely anybody ventures to plant his feet down with 
assurance. This is one of the main reasons why, in 
spite of the large quantity of currency out, business 
finds so little employment for it, and why there is so 
little prospect of relieving the stagnation. It is the 
quality of our paper money which produces such 
effects, and a further increase of its quantity would 
not better things, for it would only deteriorate its 
quality, making its value still more uncertain. On 
the contary, I am convinced if we had 10 or 15 per 
cent, less currency out to-day, business would not be 
more stagnent, capital not more timid, enterprise not 
more sluggish than we find them to-day. 

It is evident to my mind that the business of the 
country would be in a much healthier condition if Con¬ 
gress, instead of spending the whole of last winter in 
an effort to inflate the currency, had inaugurated a 
policy moving with gradual but steady and irrevoca¬ 
ble steps towards a resumption of specie payments. I 
know very well that specie payments do not cure all 
evils that flesh is heir to. I know, also, that specie 
payments are, in a country like this, not always to be 
maintained without interruption. The inflationists 
are fond of telling us that in 1837, and in 1857, when 
we had specie payments, the banks were compelled to 
suspend. True, we have had such revulsions at an 
interval of twenty years, and then, after a short sus¬ 
pension the banks resumed and business started again 
with a sound currency into a healthy activity. But 
when from the fact of a short suspension every twen¬ 
ty years the inflationists draw the conclusion that we 
had better not return to specie payments at all, and 
keep an irredeemable currency all the time, they 
might as well say, that since we have an invasion o! 
the cholera about once in twenty years, it is best to 
keep the cholera here all the time, so as not to be ex¬ 
posed to a temporary interruption of the regular order 
of things. 

These were among the foremost reasons which in¬ 
duced me to advocate a resumption policy last winter 
in the Senate. The moment seemed to me very propi¬ 
tious. In consequence of the crisis the prices of com¬ 
modities had already declined to a low point; the pre¬ 
mium on gold was low; credit in business transactions 
had been largely contracted; private indebtedness had 
to a great extent been liquidated; businessmen had 
generally but light stocks on hand and had been cir¬ 
cumspect in their operations and engagements; in one 
word, much of the work of preparation which must 
precede resumption, had already been done by the 
crisis of 1873. That condition of things has in many 
things continued to exist, and I shall persevere in the 
advocacy of the same policy. 

RESUMPTION OF SPECIE PAYMENTS. 

True, the resumption of speeie payments would not 
cure all evils, but it would cure a great many. It 
would remove that terrible uncertainty which renders 
every sound business calculation impossible and makes 
people gamblers in spite of themselves. It would 
give the business of the country again the safe basis 
of a currency of assured value, upon which it can take 
anew start and a healthy development. It would de¬ 
prive the national government of a most dangerous 
and despotic power, which puts the private fortune of 
the citizen at its mercy. It would relieve the business 
community of that most intolerable condition, which 
makes everybody tremble when Congress meets for 
fear that every business arrangement be upset and 
every value be changed by new currency legislation— 
a condition of things keeping the whole business com¬ 
munity in an incessant fever of anxiety. It would re- 


| move one of the principal obstacles which stand in the 
way of agricultural prosperity; and as the well-doing 
of the agricultural interest is the basis of all business 
prosperity in the West, as well as in the South, you 
will pardon me for directing a few remarks to this 
point particularly. The farmers are persistently told 
by the inflationists that an expansion of the currency 
would benefit and the resumption of specie payments 
injure them. And yet nothing can be clearer than 
that of all economic interests the agricultural suffers 
most severely from an unsound currency, such as we 
have. 

HOW THE FARMER IS AFFECTED. 

The farmer produces but a few staple articles for 
sale, and he has a considerable variety of articles to 
buy. A portion of some of the most important staple 
products is exported, and the price of the whole crop 
is regulated by the foreign market. The farmer re¬ 
ceives the price paid at Liverpool, less the cost of 
transportation and the profits of the intermediate op¬ 
erators, with the premium on gold added. But the 
price of those staples in the foreign market are meas¬ 
ured by the specie standard prevailing there, and not 
driven up by any paper inflation; and they are also 
depressed by the competition of other agricultural 
countries. While thus receiving comparatively low 
prices for what he sells, he has, under our currency 
system, comparatively high prices to pay for every¬ 
thing he buys, in clothing, shoes, groceries, household 
and farming utensils, and so on. Why is this so ? 
The value of an irredeemable paper currency con¬ 
stantly fluctuates. The importer of goods, the mer¬ 
chant, the manufacturer, when offering their articles 
for sale, first add to the price, at which they would sell 
under specie payments, the premium on gold. But 
they know also that they run the risk of the fluctua¬ 
tion and possible depreciation of the paper money 
they get for their goods, so that, if they sell on time, 
the sum of paper money they receive in payment, 
when the purchaser pays his note, may not represent 
the same gold value which the same nominal sum rep¬ 
resented when the sale was made. The merchant or 
manufacturer protects himself against his risk of loss 
by making another addition to the price of the goods 
he sells. Usually the goods pass through several 
hands; those of the jobber, the Western or Southern 
vvholsale dealer, and the retailer, before they reach the 
consumer. Each one of these intermediaries runs the 
same risk of the depreciation of the paper currency, 
and protects himself by making another addition to 
the price on his part. And who lias to pay the three 
or four additions to the price made by the traders for 
their own protection against the fluctuations cf the 
paper money? Of course the consumer; in this case 
the farmer. The price of everything he has to buy 
therefore lias been run up not only by the premium on 
gold, but far beyond that, by the additional percent¬ 
age covering the risk of three or four intermediate 
traders. Ail this is owing to the nature of our cur¬ 
rency. 

But does not the risk of currency fluctuation affect 
also the price of the products the farmer has to sell ? 
Yes, it does; but in the opposite way. The trades¬ 
man who buys the farmer’s wheat'and ships it to St. 
Louis or Chicago, the grain merchant who ships it to 
New York, runs the same risk of currency fluctuation 
also, and try to protect themselves. But they cannot 
put it on the price of the wheat they have bought, for 
the reason that the price of that wheat at New York 
and Liverpool is determined by the market there, which 
market is controlled by the competition of all the agri¬ 
cultural countries of the civilized world. How do these 
traders then protect themselves ? By deducting the 
percentage necessary to cover their risk from the'price 
they pay to the farmer. The farmer flatters himself 
that if gold goes up he gets for his products the benefit 
of the higher premium of gold. But the risk of the 
tradesman who buys from him being deducted, he gets 
a considerable percentage less than the full premium; 
while on the price of the goods he buys the risk of the 
tradesman is added to the premium and the farmer has 
to pay a very considerable percentage over and above 
that premium. Thus the farmer’s candle burns at both 
ends. The character of our paper currency, in conse¬ 
quence of its inflation, blows up the prices of every¬ 
thing the farmer has to buy and the same thing runs 
down the prices of all he has to sell. When he buys a 
thing the risk of currency inflation is against him and 
he has to pay for it. When he sells his products, the 
risk of currency inflation is against him, for it is de¬ 
ducted from the price he gets. Even under favorable 
circumstances, the farmer does not make much over 
and above his expenses. But under such a system of 
currency he makes still less, if anything. No wonder, 
therefore, the farmer does not flourish. 

Now it is evident, the more such a currency is inflated 
the more it will fluctuate, the greater the risks to cover, 
and the heaver the burden on the farmer. It is, indeed, 
pretended that farmers who are in debt, who have mort¬ 
gages on their land, would be benefited by inflation, in 
so far as inflation would depreciate the currency and 
the debtor would be enabled to pay in dollars of less 
value. Leaving the morality of this argument out of 
the question, it is easy to show that this would in the 
long run not benefit the fanner at all. 










FINANCIAL RECORD. 

“WE NEED ONE THING BESIDES MORE MONET, AND THAT IS BETTER MONEY.”— Senator Each. Chandler. 

FRIDAY, OCTOBER 9, 1874. NO. 36. 


The Financial Record will be continued until further no¬ 
tice, and will be sent free of postage, to all persons who will re¬ 
mit 60 cents to the publishers. All editors who receive it are 
invited to send their papers in exchange. It will no longer be 
published by the American Social Science Association, 
but for the present, as heretofore, communications respecting 
it may be addressed to the Secretary of the Association, F. B. 
Sanborn, No. 5 Pemberton Square, (Room 21,) Boston; and all 
exchange papers, public documents, etc., may be forwarded to 
the same address. 


Financial Events and Possibilities. 

The great orators have had nothing to say on the 
currency question the past week. In some aspects of 
the case this is an exceedingly favorable symptom. 
The drift of public sentiment is too plain to be mis¬ 
taken. Party conventions everywhere and of all 
shades of political opinion have of late eagerly de¬ 
clared themselves for specie payments. Speakers of 
the hard money persuasion have therefore had no 
need to make an argument, and the inflationists have 
maintained a judicious silence. Of the latter class 
Senator Logan is a notable example. He mastered 
the financial problem in the leisure hours of two weeks, 
and proclaimed with as much vehemence as confidence 
that the country was perishing for the lack of money. 
All through the session of Congress we heard it. Sen¬ 
ator Logan is however shrewdly anxious not to be on 
the unpopular side, and as he has by bad judgment, 
placed himself there, he hopes the people will forget 
it. Hence, when he went to Indianapolis last week, 
to speak for the Republicans, he touched on every 
political question of the day but this of the currency. 
In the home of Morton he did not venture to repeat 
his wildcat theories. He has so slight a following 
that he would have injured the cause be was deputed 
to assist if he had talked inflation. 

If the well-known orators have not spoken, there 
have lately been two notable addresses on the subject 
of money,—one by Prof. Julius H. Seelye of Amherst 
College, from which we quoted last week, and the 
other from which we quote to-day, by Prof. Perry of 
Williams College, at Omaha. Both were clear, dis¬ 
tinct treatises on a great but easily comprehensible 
topic, and both are calculated to do much good. The 
position was boldly taken in each, that irredeemable 
paper money -is a curse, and chiefly so to the produc¬ 
ing classes; and that it is the duty of the government 
to get rid of it quickly and at all hazards. This is 
perfectly sound, and the more we can hear of such 
doctrine the sooner shall we find the people instructed 
up to the point of raising what Prof. Perry beseeches 
them to raise, “an honest cry for an honest dollar.” 


The Treasury statistics for September show that 
the decrease of the public debt was small, only $435,- 
000. Six millions of bonds at six per cent, were 
changed into fives. The specie on hand was increased 
from less than $13,000,000 on the 1st of September, 
above accrued interest and coin certificates, to more 
than $18,500,000 October 1. The fractional currency 
issue, again shows an increase of a million,-and now 
reaches $46,750,000, two millions more than at the end 
of July. This kind of inflation is inexcusable. An¬ 
other call for $10,000,000 five-twenty bonds was made 
on the 1st instant, making an aggregate of sixty mil¬ 
lions called since the last negotiation with the syndi¬ 
cate. This transfer will make a saving in the inter¬ 
est charge of $600,000 a year. 

The Internal Revenue receipts for the month of Sep¬ 
tember, were $8,538,025, which is said to be a decrease 
of about a quarter of a million from last year, though 
the Bureau of Statistics gives the receipts for Septem¬ 
ber 1873, at $8,291,210. So many different statements 


of the same facts and figures come to us from the Treas¬ 
ury department, that we do not know which to depend 
upon. The customs receipts are said to have been 
about four millions more than in the corresponding 
month last year. What the amount was there is no 
way of learning. We have called attention to thefact 
that the stock of gold in the Treasury vaults had in¬ 
creased. H the surplus had been sold, the govern¬ 
ment would have received premium to the amount of 
about $550,000, and the debt would have nominally de¬ 
creased by almost exactly a million. We presume 
there are some people who call themselves honest, 
who could regret that the government did not shave 
more of its own paper by selling a part of its stock 
of real money. 

The government expenditures for the month were 
$18,801,789, and for the quarter ended with Septem¬ 
ber they were $53,516,379 against $51,666,671 for the 
same quarter in 1873. Neither statement includes in¬ 
terest on the public debt. We do not observe, in the 
figures, anything to verify the assertion that Congress 
has made startling economies in its appropriations. 

The last New York bank statement shows a consid¬ 
erable change from that of the previous week, and 
more noteworthy changes from the condition the banks 
were in a few weeks ago. We compare with the 
statement for August 29: 


Oct. 3. Aug. 29. Differences. 

Loans.$281,277,000 $278,319,800 Inc. $2,967,200 

Specie. 18,374,200 18,638,100 Dec. 263,900 

Legal Tender.... 63,966,100 67.282,600 Dec. 3,315,500 

Deposits. 236 925,900 235,000,100 Inc. 1,925,800 

Circulation. 25,419,600 25,803,300 Dec. 383,700 

The figures show an increasing use of money, and a 
movement of money away from New York, for crop- 


moving, of course. Yet in spite of this large loss, the 
amount of reserve is now as large as it was at any 
time during the calender year 1873. In this period 
when there is usually a stringency in the money mar¬ 
ket, the New York banks not only have a reserve 
larger than is necessary under the present law, but 
they have $16,750,000 more than would have been 
required under the old law, that is twenty-five per 
cent, of deposits and circulation. This fact confirms 
in a striking manner what we maintained w'lien the 
law was under discussion, that the reduction in the 
required reserve was not needed, that it was a step 
towards hazardous banking, and that no sound institu¬ 
tion would take advantage of it. 

Mr. Spinner gives notice that the government will 
soon resume redemption of bank notes. Hereafter he 
says he will call upon banks frequently, and compel 
them to keep good their five per cent. fund. It is a 
pity he did not long ago reason with himself that if 
he paid out a third of a million a day, and drew noth¬ 
ing back, he would in time exhaust even a fund of 
seventeen and a half millions. But now that he has 
learned something, let him remember it. 


Mr. Spinner’s Redemption Agency. 

[From the Boston Post.] 

THE U. S. TREASURY. 

The collapse of the Redemption Agency at Wash¬ 
ington may be either temporary or final. It is certain¬ 
ly complete. The scapegoat in this matter appears to 
be Mr. Treasurer Spinner. There were no difficulties 
in the work to be accomplished which could not have 
been overcome by an experienced banker at a quarter 
of the cost involved in the present unsuccessful at¬ 
tempt. Two years ago the Financial Chronicle stated, 
upon the authority of an expert, that a bureau for the 
redemption of National bank bills could be maintained 
in New York at an expense of $35,000 per annum. In 
view of our Treasurer’s famous tables with their fifty 
compartments, of the elaborate counting and recounting 
which he has exacted, of the hundred clerks who have 
labored in vain over accumulating piles of currency, 
the public might suspect that the Chronicle had written 


about a matter which it did not understand, were it not 
that at other periods of American business the Suffolk 
Bank found no difficulty in redeeming daily between 
a million and a half of currency with a staff of from 
sixty to seventy clerks. The Treasury has employed 
a much larger clerical force in handling, or rather in 
attempting to handle, receipts which have averaged 
less than $400,000 a day. For a time it struggled in 
hopeless silence over work which a private institution 
would have preformed with one-quarter of its force. 
Too soon, however, increasing arrears compelled a 
confession of incompetency. It called upon the banks 
to come to its aid, and the quicker the better. The 
banks from the first have obeyed the law to the letter 
with unusual promptitude, although they are wronged 
by its provisions and inconvenienced in its enforcement. 
They might well have done less. They cannot safely 
do more. Another consignment to Washington of 
seventeen and a half million dollars in legal tender 
notes is something which the Department had no right 
to request, and the banks, if only in the interest of the 
community, no choice but to refuse. The first deposit 
was a mere change in the custody of some of their 
reserve; but a second one would be contraction, tem¬ 
porary it is true, yet quite sufficient to produce mone¬ 
tary derangement, and in harder times material dis¬ 
tress. Mr. Spinner, about two months ago, wrote a 
letter purposing to clear Clinton L. Merriam from the 
charge of being an inflationist. In this letter he char¬ 
acterized the Currency Act as a contraction measure, 
because through the 5 per cent, deposited upon circula¬ 
tion it locked up $18,000,060 greenbacks in the De¬ 
partment vaults. No claim could well be more absurd, 
for these legal tender notes, whether held by the 
Treasury or the banks, or even as is now the case, 
by the public, count equally and always in the reserve. 
Really it seems that the Treasurer of the United 
States, like the Judge of the Supreme Court in the 
story, might be expected to know something. A great 
and indeed fatal mistake was made at the outset in the 
location of the Redemption Agency. New Y’ork is the 
monetary center of this country. Its financial su¬ 
premacy is indisputable, and, otherwise, has been fully 
recognized by the Treasury, which keeps three-quarters 
of its coin and four-fifths of its currency in that city. 
Every step in the process of redemption exacts its per¬ 
formance at the most convenient point. There is not 
a word in the Act requiring it to be operated in Wash¬ 
ington. But the policy of centralization is concerned 
about nothing save its own growth. Why should it re¬ 
gard the interests of the business world when already it 
can trample upon the rights of States and despise the pe¬ 
titions of their people? It is very fortunate for the 
commercial community that the attempt to center the 
exchanges of a country in a city which possesses neith¬ 
er capital nor business has thus far failed ignominious- 
ly. Redemption, if conducted properly in a proper 
place, would resolve itself into a system of offsets and 
the adjustment of balances between debtor and credit¬ 
or banks. In this way $17,500,000 legal tender notes 
would amply suffice as the medium of exchange. In 
this way on Tuesday the New Y r ork banks effected 
clearances of $67,271,921, with balances amounting to 
$3,323,584. Under Mr. Spinner’s management all 
the money in New York would be absorbed in clearing 
the transactions of a single day. The whole opera¬ 
tion, as now conducted, is so clumsy as to be an an¬ 
achronism, and so slow that, were business active, it 
would occasion serious stringency in money, and might 
even precipitate a financial disturbance. 


Spirit of the Press. 

[Chicago Times.} 

The peculiarity of this suspension of shin-plaster re¬ 
demption is that nobody seems to care much about it. 
There is no alarm, no excitement. Perhaps not one 
man in a hundred is aware of the fact. If the sys¬ 
tem were one of genuine redemption,—redemption in 
value money,—suspension would be a far more serious 
matter. It would indicate the exhaustion of the value 
basis of the currency, and thus produce general dis¬ 
trust, alarm, and panic. As it is, a suspension occurs 
without causing a ripple of excitement. The cheap- 
money philosophers will (if they think of it) be likely 
to point to this as a proof that the specie basis is a fal¬ 
lacy, and specie itself a relic of barbarism. Men who 
are capable of thinking in straight lines will readily 
perceive that it is not a proof of any such thing. 
Greenback redemption, except so far as it supplies 
people with clean and whole bills in place of dirty and 
ragged ones, or with one kind of promise to pay which 
they prefer to another kind, amounts to nothing what¬ 
ever. Specie redemption on the contrary amounts to 

































123 


a great deal. It is the fulfillment of a promise to ren¬ 
der an equivalent of value—a promise by the bill-ma¬ 
ker to render an equivalent for a value which he has 
directly or indirectly received from the bill-holder. 
Specie redemption is still more—it is a gage showing 
when the paper circulation is excessive, and a regula¬ 
tor enforcing the retirement of any excess that may 
exist. 

[Detroit Tribune.] 

The exponents of the inflation policy insisted that 
the great affliction of the country, especially of the 
newer portions of it, was the lack of currency, and 
that a certain remedy was to authorize the establish¬ 
ment of national banks there. But now that the op¬ 
portunity for procuring further banking facilities is 
offered to them, these States fail to avail themselves 
of it. Of §55,000,000 thus freely tendered to them, 
they have, thus far, taken less than §2,000,000. The 
result is a complete practical demonstration of the 
folly of the inflation arguments on this point. We are 
glad to perceive that the results of this experiment are 
opening the eyes of some former advocates of balloon 
finance to its fallacy. 

[Cincinnati Enquirer.] 

The National Banks constitute the most stupendous, 
the most insidious and the most dangerous monopoly, 
to politics and - to business, that has ever begun to steal 
bread from our laborers, security from our business, 
and freedom from our people. And the amazing phe¬ 
nomenon is presented of an intelligent people paying 
this monopoly twenty millions of dollars a year for 
their hostility to the popular welfare. The American 
people have painful cause to know how entirely the 
business of the country is at the mercy of this monop¬ 
oly. One year ago hundreds of thousands of men were 
thrown out of employment; almost every merchant 
and manufacturer in the country saw suspension or 
failure just ahead; thousands of men and women 
looked starvation in the face; men with millions of 
property were driven to the wall, and dread covered 
the land. Why ? The word “suspend” flashed over 
the wires, and two thousand National banks, with ap¬ 
palling harmony, closed their doors. 


Paper Money aucl tlie Nebraska Farmers. 

[From Prof. Perry’s address at Omaha, Oct. 1.] 

The greatest foe the farmers of this country have 
had for the past dozen years has been the paper mon¬ 
ey. Some of you have suffered fearfully, this year, 
from the devastations of the grasshoppers; I would 
not belittle your losses, for they have been great, and 
they moved me to pity; but the swath of your grass¬ 
hoppers has been comparatively a narrow swath, and 
the losses, though great, have been local and not na¬ 
tional; but the swatli of the greenback-grasshoppers has 
been a wide swath, and the looses have been national 
and not local. I hold in my hand a silver dollar. It 
is a long time since you have all seen one. You all 
seem to be as glad to see it as if it were an old friend. 
In truth, it is an old friend, whom you have unwisely 
discarded, but who is just as ready to serve you faith¬ 
fully as he ever was. This dollar is a reality. There 
is no sham about it. There is nothing mysterious 
about it. There is nothing magical about it. It is 
just so much silver metal stamped, but the stamp adds 
only a slight fraction to the value. It took honest 
labor to get this silver out of the earth, refine, alloy and 
coin it, therefore it is just the thing to help exchange 
other things that have cost honest labor. This dollar 
is just like a bushel of wheat; it has cost something, 
it is adapted to a human want, and therefore it is good 
for something. Labor for labor is the law of exchange, 
and therefore the dollar that has cost labor is the only 
honest dollar. It is the only dollar about which there 
is no trick. It is the only dollar that defrauds nobody. 
It is a real equivalent. It is indeed only a tool to 
help exchange other things, but it is an honest tool. 
We take it only to part with it again, but when we 
take it we get an equivalent for what we give, and 
when we part with it we give an equivalent for what 
we get. Money is indeed a medium to exchange other 
things with, but it is of vast consequence that the 
medium be a good medium, a real medium, an intelli¬ 
gible medium, a medium that gives no advantage in 
the exchange to either party. Moreover, this silver 
dollar is the same thing year in and year out. I now 
hold in my hand a so-called paper dollar. It is not a 
dollar at all. It is only a promise to pay a dollar. Bead 
it, and you will see it is so. “The United States will pay 
to-Bearer one dollar.” It carries the truth upon its very 
face. It is only a promise. Unfortunately also, it is 
a promise that has not been kept. It is an unfulfilled 
promise. Worse than that, it is a promise that the 
promiser refuses to fulfill. It is a broken promise. 
It is a dishonored promise. It is failed paper. Because 
it is an unfulfilled promise, it is of course worth less 
than that which it promises to pay. It is depreciated 
now. It always has been depreciated. It has been at 
times very much depreciated. Now we have seen that 
the dollar as a thing is a medium helping exchange all 
other things, and also that the dollar as a denomina¬ 
tion is a measure measuring all other values. But a 
measure of other things should itself be uniform. A 


THE FINANCIAL RECCED. 


bushel measure should be the same thing year in and 
year out—to buy and sell by. A yardstick should be 
thirty-six inches long, no more and no less, made of 
solid material that just holds its own, and not of India- 
rubber, expansible and contractible, of one length to¬ 
day and another to-morrow, and nobody knows what 
length the next time. 

An inconvertible paper money, always depreciated 
and always variable, is worse for farmers than for 
almost anybody else; first, on the ground of its depre¬ 
ciation, and second, bn the ground of its variability. 
As the value of money goes down, of course general 
prices tend to rise; but, unfortunately, they do not 
rise equally, nor in equal times; and some prices do 
not rise at all. For example, manufactured goods are 
quickest to experience a rise of price owing to a de¬ 
preciation of the currency, because as a rule manufac¬ 
turers are intelligent men and know the tendency of 
depreciated money to depreciate more, and thus has¬ 
ten to insure themselves by putting a higher price on 
their goods. Wages rise much more slow'ly than 
goods, and never proportion ably ;• because laborers do 
not well understand the situation, and never act quick¬ 
ly enough to insure themselves; and so they are al¬ 
ways great sufferers from a depreciated money. 
Beal estate rises slowly and irregularly, though at 
times tumultuously, under such money, and never on 
the average so high as manufactured goods rise; while 
agricultural products, some parts of which are export¬ 
ed to foreign countries, scarcely rise in price at all. 


CARL SOHURZ. 


Another Great Speech on the Currency. 


[Concluded from No. 35.] 


Made at St. Louis, September 24. 

THE DEBTOR CLASS. 

How are debts paid ? Out of surplus earnings; out 
of that money which you gain over and above your 
expenses. Now I have shown that an irredeemable 
currency, producing by its fluctuations high prices for 
what the farmer has to buy, and low prices for what 
he has to sell, turns the scale in every case against 
him. It does not increase, but. seriously reduce, his 
surplus earnings. It, therefore, does not help him out 
of debt, but in the long run gets him into debt. The 
truth is, unlike the Wall Street operator or the specu¬ 
lative merchant, who deals in many articles, turns his 
investments over several times a year and watches his 
chances, the farmer cannot take advantage of the 
changes of values and the fluctuations of trade. 
There are only certain articles he produces and has to 
sell, more or less at a certain time. There are certain 
things he must buy, also more or less at a certain time. 
He cannot change or modify that to avail himself of 
favorable opportunities, but he is the helpless victim 
of circumstances. No class of citizens is therefore 
more interested in fair dealing, and in the basis of all 
fair dealing, a sound currency. The farmer cannot 
prosper as long as the prices of all things he has to 
buy are artificially raised, and the prices of all things 
he has to sell artificially lowered, and such will always 
be the effect of the fluctuations of such a currency as 
we have. The farmer justly complains of the extor¬ 
tions practiced upon him by certain transportation 
monopolies; he justly complains of the injurious effects 
of the protective tariff; but fully as grinding, nay, 
more so, is the oppression inflicted upon him by a 
vicious currency. It is astonishing how many farmers 
and planters are still deluding themselves on this 
point. But it is to be hoped that they soon will rise to 
a just understanding of their true interests, and, with 
one voice, demand what alone can protect them 
against the most subtle kind of robbery, an early res¬ 
toration of specie payments. 

Another evil the resumption of specie payments will 
cure consists in those absurd and demoralizing notions 
concerning the creation of wealth which our vicious 
currency has been fostering. It will stop that damna¬ 
ble demagogism which seeks to teach people that in 
some way they ought to get around paying their hon¬ 
est debts, and that they can grow rich by some shrewd 
gambling manipulation of the paper money easier 
than by honest work. Studying the theories advanc¬ 
ed and the schemes proposed by the inflationists, you 
might almost think the alchemists of the middle ages 
had risen again, who pretended that they had discov¬ 
ered the art of making gold out of nothing. So, our 
inflationists pretended to have discovered the art of 
honestly discharging debts without paying them, and 
of enabling you to acquire wealth without producing 
more than you consume, or earning more than you 
spend. But what the alchemists brought forth was 
something that was yellow, and also heavy; but it was 
not gold. And what the inflation doctors will bring 
forth, if their prescriptions be followed, is an inflation 
of prices, wild speculation in fictitious values, decep¬ 
tive appearances of thrift, but not real wealth and 
prosperity. They try to make the American people 


believe that they can vastly increase their wealth 
simply by issuing more promises to pay. What 
effect are such teachings calculated to produce ? It is 
a matter of experience that, when you want to ruin a 
man, economically, physically and morally, you must 
make him believe he is rich when he is not. 

INFLATION ABSURDITIES. 

The absurdities peddled by these philosophers of the 
inflation school are sometimes most amazing. To give 
you a fair illustration I will read an article which ap¬ 
peared in one of the Democratic papers of this city 
some time last June. I cut it out, for it appeared to 
me very significant and exceedingly amusing. Here 
it is: 

“What is needed to restore healthy circulation and 
confidence, and what Grant says there shall be more 
of, is money. In a case exactly analagous to the one 
now under consideration, a very able writer on politi¬ 
cal economy draws a picture that suits the present 
condition of the country to perfection. In substance 
the existence of an individual was supposed, with 
wealth so great that all who knew him had entire con¬ 
fidence in the performance of what he promised. He 
said to the laborers of the country, ‘Go into the mills, 
and I will see that your wages are paid;’ to the millers, 
‘Employ these people, and I will see that your cloth is 
sold; 1 to the fanners, ‘Give your food to the laborer 
and your wool to the millers, and I will see that your 
bills are at once discharged; 1 to the shop-keepers, 
‘Give your coffee and your sugar to the farmer, and I 
will see that payment shall forthwith be made; 1 to the 
city traders, ‘Fill the orders of the village shop-keep¬ 
ers, and send your bills to me for payment; 1 to the 
landlords, ‘Lease your houses, and look to me for the 
rents; 1 to all, ‘I have opened a clearing-house for the 
whole country, and have done so with a view to ena¬ 
ble every man to find, on the instant, a cash demand 
for his labor and its products, and my whole fortune 
has beeu pledged for the performance of my engage¬ 
ments; 1 what, after all these things, would be the ef¬ 
fect in the country ? At once the societary circula¬ 
tion would have been restored. Labor would have 
come into demand, thus doubling at once the produc¬ 
tive power of the country. Food would have been 
demanded, and the farmer would have been enabled 
to improve his machinery of cultivation. Both would 
have been sold, and the spinner would have added to 
the number of his spindles. Coal andiron would have 
found increased demand, and mines and furnaces 
would have grown in number and in size. Houses be¬ 
coming more productive, new one s would have been 
built. The paralysis would have passed away, life, 
activity and energy having taken its place, all these 
wonderful effects having resulted from the simple 
pledge of the one sufficient man that he would see the 
contracts carried out. He had pledged his credit, and 
nothing more. And what the man could do in the 
case here supposed, the government through its Con¬ 
gress could do to-morrow, if it had nerve enough and 
strength enough to put its master aside and declare 
for the liberties of the people against the perverted 
ideas of the despot. 11 

It would seem that if anybody is foolish enough to 
write such fantastic nonsense, nobody would be fool¬ 
ish enough to believe it. And yet this is but a florid 
elaboration of the very idea which the inflationists ad¬ 
vance, and by which they seek to make their doctrines 
popular. It is the idea that an expansion of our cur¬ 
rency means a general distribution of money by the . 
government among the people, especially those who 
need it; that if anybody has not money enough to 
start an enterprise or to carry on his business as he # de- 
sires, he has only to hold out his hand to the govern¬ 
ment, and it is at once filled with a pile of greenbacks; 
or that if anybody is in trouble with a mortgage on his 
house or farm, or cannot redeem a note, or cannot pay 
his rent, the government, by issuing more greenbacks, 
will at once furnish him the funds; or that, if money 
be not distributed in this exact way, then at least by 
some hocus pocus the same effect is produced. In one 
word, that the government is a sort of rich uncle with 
unlimited means, whose business and duty it is to help 
the boys with cash when they get into trouble. In¬ 
credible as it may seem, I have seen many people who 
had received just that impression from the teachings 
of the inflationists, and there are multitudes who en¬ 
tertain it to-day. In fact, this absurd delusion has 
wrought more mischief in the popular mind than any 
other argument. But what are the true facts in the 
case ? How would the paper money get out if the 
government expanded the currency ? The government 
would have to buy up United States bonds in the mar¬ 
ket, that is in Wall Street, New York. The green¬ 
backs will go in the first place into the hands of those 
who have bonds to sell, and that is not the farmer, 
who has a mortgage on his land, nor the Western busi¬ 
ness man who cannot pay his note. But it is the East¬ 
ern banker or operator who deal in bonds. To show 
you what is then apt to become of those greenbacks 
so issued, I will repeat a statement taken from official 
sources which I made in the Senate last February. 
On the 1st of February, 1873, the outstanding green¬ 
backs amounted to §356,000,000, of which the banks 
in the three cities of New York, Boston and Philadel- 















THE ETNA HO T AT, RECORD. 


124 


phia held $03,797,982. On the 16th of February, 1874, 
the outstanding greenbacks amounted to $381,327,327, 
of which the same banks in Philadelphia, New York 
and Boston held $87,228,654. There had been an in¬ 
crease of the greenback circulation of $25,327,327, and 
all of that increase, with the exception of $1,898,645, 
had remained in the banks of three Eastern cities, 
wdiile the $1,398,645 most probably was in the banks 
of Rhode Island and Connecticut. Where was the 
money then for the farmer with his mortgage and the 
Western business man with his unpaid note? in the 
Eastern banks; and if the farmer or the Western 
business man wanted any of it, the farmer had to raise 
and sell grain for the amount, and the latter had to 
find sufficient security to induce a bank to lend it to 
him. So they had to do before, so they have to do 
now, and so they always will have to do to get money. 
The government will never go round peddling it out 
for nothing to those who need it. — 

THEIR EFFECT. 

But what is the effect of such absurd teachings as I 
have described upon the morals of the people ? What 
will a great many men do, if you persuade them that 
they need not exert themselves too much, for if they 
get into trouble the government will issue money 
enough to help them out, to pay their debts, to protect 
them against the risks of business ventures ? A very 
large number will depend upon that mysterious aid, 
and believing that they can get rich without honest 
labor, will shun hard work, give themselves to specu¬ 
lative enterprise and abandon wise economy. Nothing 
is more striking in times when inflated paper currency 
exists, than that honest industry yields to speculation 
and gambling, and wise economy to thoughtless ex¬ 
travagance. It always has been so, and always will 
be so. Nothing will benefit the country more than 
putting an end to that vicious currency system which 
feeds so dangerous a demagogism, and will only 
strengthen so demoralizing an influence on society the 
longer it is continued. A return to specie payments 
will convince every man in the country once more that 
honest industry is the only reliable source of wealth; 
that he who contracts a debt must expect to pay it 
himself, and he who wants to get on in the world with¬ 
out trouble must earn more than he spends. A money 
system that enforces such a lesson will make the peo¬ 
ple wiser and richer at the same time. 

REPUDIATION REPUDIATED. 

Finally, the resumption of specie payments will 
greatly increase the credit of the country, especially 
by making an end of all repudiation ideas. I deeply 
deplore the fact that in this as in several other States, 
a political party could be found willing to revive the 
old, and, as the world thought, exploded heresy that 
the 5.20 bonds should be paid off in depreciated paper 
money, instead of coin. The basis of, or rather the 
pretext for, that heresy is, that the law by virtue of 
which those bonds were issued, did not in express lan¬ 
guage make them payable in coin. Nobody will deny 
that a debt must be paid according to the original bona 
fide understartding between the debtor and creditor. 
Can anybody sincerely believe when, amidst the terri¬ 
ble uncertainties of the war, the government called 
upon its own citizens and those of foreign countries to 
lend it their money and take its bonds, a single man 
would have done so had he seen the least reason to 
fear that the government would redeem those bonds 
not with real dollars, but with depreciated due bills ? 
Not a bond would have been sold, had any such appre¬ 
hension been entertained. 

There can be no question about the original under¬ 
standing. And now, wdiat do you call paying those 
bonds? Will the government be paying those bonds, 
bonds promising to pay so many dollars with 6 per 
cent, interest, if it merely exchanges them, not for so 
many dollars, but for other promises to pay dollars, at 
present worth 10 per cent, less, payable, Heaven 
knows when, and bearing no interest? Is that pay¬ 
ment? Do I pay a mortgage running at 6 per cent, 
interest by giving for it an already protested due bill 
selling in the market at a heavy discount, and bearing 
no interest at ;rtl? It is a plain and palpable cheat. It 
is a barefaced and shameless repudiation. No nation 
having the least regard for its own honor, will ever 
think of descending to such a fraud. But subsequent 
events have made the case still clearer. The same repu¬ 
diation cry having been raised in the Presidential elec¬ 
tion of 1868, Congress in 1869 passed a law to strength¬ 
en the public credit, in which it was expressly declared 
to avoid thenceforth every possibilty of a difference of 
opinion, that the 5.20 bonds should be paid in coin. 
Since that time many of those bonds have changed 
hands, and were bought by parties counting most firm¬ 
ly upon the good faith of the Congress of the United 
States. The very originators of the theory, that the 
5.20 bonds should be paid in greenbacks, Mr. Pendle¬ 
ton and Gov. Hendricks, of Indiana, have deemed that 
circumstance so important and decisive, as to declare 
themselves publicly, that the duty of the government 
to pay those bonds in gold admits no longer of doubt. 

DEMOCRATIC REPUDI ATORS. 

And now we see the Democratic party of Missouri 
in their platform, solemnly insisting that even after 


the law of 1869, which thoy call a usurpation of power, 
those bonds must be paid in greenbacks. Thus the 
Democratic party of Missouri, like that of Indiana, 
Tennessee and Ohio, has made itself the champion of 
the repudiation scheme. And that is one of the is¬ 
sues upon which they ask for the suffrages of the peo¬ 
ple. Do they know what they are doing ? If they 
succeeded in carrying such a measure as they advo¬ 
cate, through Congress, not only would they cheat the 
creditors of the government, but they would, by that 
act of repudiation, strike a blow at the credit of the 
American people, from which for more than a genera¬ 
tion we would not recover. Do we not want as much 
foreign capital as wo can attract, to help us build our 
highways of trade, and develop our untouched resour¬ 
ces ? Already ourcredit abroad has suffered severely 
enough from the failure of not a few of American cor¬ 
porations to perform their promises. But so far, at 
least, the credit of our government has stood firm; the 
good faith of the American nation, as such, has been 
untarnished. Let that fall also, and the very name of 
an American will inspire distrust wherever he goes. 
Then bid farewell for the length of your lives to all 
ideas of seeing any enterprise in this country, aided 
by the means which have been flowing in so freely 
from abroad, and have been so useful to us. The sav¬ 
ing which might accrue by paying greenbacks instead 
of gold for the outstanding 5-20 bonds would be as 
nothing compared with the incalculable and irretrieva¬ 
ble loss which the downfall of American government 
credit would inflict upon this country and upon every 
citizen in it. But if the repudiationists fail in carry¬ 
ing this scheme through Congress, will the mere at¬ 
tempt to do so be harmless ? Does anybody believe 
that any State can endorse the principle of repudiation 
with impunity ? Let the people of Missouri endorse 
the repudiation platform of the Democratic party by 
electing the candidates nominated upon it, and Mis¬ 
souri will stand before the world as a repudiation State. 
You insist that we have not capital enough; we want 
to attract more. For this purpose we want credit. 
What will the credit of Missouri and her citizens be, 
if the news goes forth that a majority of her people 
have pronounced for the principle of repudiation ? 
Will New York, will Boston, will Europe trust us ? 
The success of the repudiation platform by the elec¬ 
tion of the candidates standing on it, would strike a 
blow at the credit of Missouri which soon every one of 
her citizens would feel. 

HOW TO RESUME. 

If for no other reason, then for this alone, having at 
heart the honor of the State, and the credit of her peo¬ 
ple, and the interests based upon that credit, must I 
oppose the Democratic party of Missouri; and I firmly 
trust that every citizen who has the welfare of his 
State more at heart than that of his party, will not 
hesitate to join in the verdict of condemnation. The 
resumption of specie payments will forever kill that 
sort of rascality, and therefore no repudiationist is in 
favor of specie payments. Going to the bottom of 
things you will find that inflation and repudiation are 
in the end one and the same thing. Inflate the cur¬ 
rency as often as it is demanded, and final repudiation 
will be inevitable. The inflation idea is therefore 
firmly rooted only with those who look upon repudia¬ 
tion as the ultimate end. Only they are consistent. 
All others will soon abandon it, seeing its folly and 
mischievousness. 

There is only one final solution to what we call the 
financial question, that is the resumption of specie pay¬ 
ments. All other schemes are temporary expedients 
and quackery. We must at last adopt this one solu¬ 
tion, and, I am honestly convinced, this time is as pro¬ 
pitious as any in the future will be. If we let it slip, 
and permit the balloon of speculation to fill up again, 
we shall inevitably have another collapse at no distant 
day, and the opportunity for a return to a sound cur¬ 
rency will be no better than it is now. It will come 
some day with the certainty of fate. You have to 
choose between two methods of bringing it on. You 
must go forward, or you will slide backward. Either 
you will avail yourselves of such a condition of things as 
the present, and resolutely advance towards resump ■ 
tion, bearing such temporary inconveniences as such 
a movement may bring witli it, or you will go on in¬ 
flating the currency until finally it outgrows every 
control, and then collapses with a tremendous crash, 
involving the whole country in universal bankruptcy, 
ruin, repudiation and dishonor. These are the two 
methods. Which of them will wise men choose ? 

But how get back to specie payments ? There are 
various methods proposed, each of which is better 
than the preservation of our present system, which 
will demand expansion as long as it exists, and unless 
courageously done away with at last inevitably bring 
on the most general.and crushing disasters. I believe 
that specie payments cannot be resumed and maintain¬ 
ed with the present volume of our currency, and that 
therefore that volume must be reduced, slowly and 
gradually, of course, but steadily, until the point is 
reached where redemption is possible. There are those 
who pretend to have discovered a method by which 
specie payments can bo reached and maintained with¬ 


out such a reduction. If that is possible, so much the 
better. I should gladly aid in carrying out the 
scheme. But candor compels me to say that so far I 
have seen no such method that will accomplish tha 
work without indirectly reducing the currency vol¬ 
ume. But I am certainly willing to advocate the 
easiest method, if it be sure. Some people are trou¬ 
bled by the idea that we have not gold enough in this 
country for such a purpose. Of course we have not, 
for gold does not flow in, but it will constantly flow 
out where it is not wanted for its principal employ¬ 
ment. If the American people unanimously resolve 
not to wear any more shoes but sandals, shoes will at 
once leave the country for other markets where they 
are used. But the moment the Americans reverse 
that resolution and wear shoes again, shoes will instant¬ 
ly come for sale from all parts of the world where 
they are cheaper than here. So it is with gold. While 
we do not employ it, it flows out. As soon as we em¬ 
ploy it again, it will 6eek our market. We shall be 
able to buy as much as we need, just as we can buy 
any other merchandise. The fear that foreign gov¬ 
ernments, or banking institutions, would conspire to 
prevent its coming here, is foolish. They cannot pre¬ 
vent it if they try, just as little as they could prevent 
the importation of wheat in case our crops fell short 
of our wants, while they had abundant crops abroad. 

WILL RESUMPTION CRAMP BUSINESS ? 

That the resumption of specie payments may for a 
moment somewhat cramp and pinch business here and 
there, is possible, but the case is very much like that 
of a toothache. However severely the decayed grinder 
may pain you, you are apt to dread the moment when 
the tooth is to be drawn. At last you submit with re¬ 
luctance to the operation. You give a shriek perhaps 
when the jerk comes, but you feel so much the more 
comfortable afterwards, and then you are sorry that 
you did not submit to the operation sooner, thus 
saving days and weeks of unnecessary trouble. You 
would certainly call him a fool who would run about 
with a toothache all his life, for fear of the dentist, 
when a single moment of acute pain might make him 
a healthy man again. Wise men will understand the 
lesson. Our decayed tooth has to come out some time; 
the sooner it is out the better. We shall then be healthy 
men again, and with clear heads and steady hands soon 
work into new and assured prosperity. We shall not 
only be the richer, but also the wiser and better for it. 
A reckless demagogism has represented this matter in 
the light of an effort on the part of the East to en¬ 
rich itself by impoverishing the West and South. I 
say this is not only absurd, but wicked; wicked, be¬ 
cause it is a new attempt to array the sections against 
each other. It is absurd, for as I have shown, the 
interests of the farming and planting class demands 
the retflrn to a sound currency more imperatively than 
any other. Only under a sound currency the agricul¬ 
tural West and South can flourish. And what interest 
could the East have to ruin the West and South? 
Ruin the West and South, and half of New York and 
Boston is bankrupt. You cannot ruin one part of the 
country without injuring the other. The people of 
the East understand that just as well as we. A sound 
currency is not an Eastern and not a Western, it is 
a common American interest, for it will promote the 
prosperity of the whole American people, West as well 
as East, South as well as North, and as such I advo¬ 
cate it. 

CONCLUSION. 

I ask your pardon for having dwelt so long upon 
this subject, but I consider it one of the most impor¬ 
tant questions of the day. I am informed that the po¬ 
sition I have taken with regard to it has not had the 
approval of many of my constituents. I ask them 
only to believe that I have been acting upon convic¬ 
tions which are very sincere and very strong; so sin¬ 
cere and so strong indeed that I should continue to 
hold them did I stand with them quite alone. I have 
been asked by political and personal friends, for my 
own sake, either to abstain entirely from expressing 
my opinions on the financial question in this campaign, 
or at least to compromise a little by declaring myself, 
for instance, for specie payments in an indefinite fu¬ 
ture, but for some expansion at present. I cannot do 
that. It is against my sense of duty. Did I not con¬ 
sider my convictions correct, I should not entertain 
them. Did I not deem them in accordance with the 
best interests of the people, I should not urge them. 
The fact that some of my constituents have so far not 
approved my opinions is all the more a reason to argue 
the matter with those who differ with me. No per¬ 
sonal considerations are admissable. I know that two 
and two make four. No personal consideration can 
make me say that two and two make five, and no ex¬ 
pediency can induce me to compromise the matter by 
saying that two and two make about four and a half. 
I am absolutely against inflation of any kind. I am in 
favor of the immediate adoption of a policy which 
will lead us by gradual but decided, direct and irrevo¬ 
cable steps to the resumption of specie payments. 
This l consider right, and for the best interests of the 
country. By this I shall stand as long as I stand at 
all. 






















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FINANCIAL RECORD. 

«WE NEED ONE THING BESIDES MORE MONET, AND THAT IS BETTER MONET .”—Senator Zach. Chandler. 


VOL. I. 


FRIDAY, OCTOBER 16, 1874. 


NO. 37. 


The Financial Record will be continued until further no¬ 
tice, and will be sent free of postage, to all persons who will re¬ 
mit 50 cents to the publishers. All editors who receive it are 
invited to send their papers in exchange. It will no longer be 
published by the Americas Social Science Association, 
but for the present, as heretofore, communications respecting 
it may be addressed to the Secretary of the Association, F. B. 
Sanborn, No. 5 Pemberton Square, (Room 21,) Boston; and all 
exchange papers, public documents, etc., may be forwarded to 
the same address. 


Financial Events and Possibilities. 

Ex-President Andrew Johnson, who is his own can¬ 
didate for Congress in one of the Tennessee districts, 
lately made a very long speech in support of his claim, 
and ventilated his opinions most freely. It is hard to 
describe Mr. Johnson’s policy on the currency ques¬ 
tion, for on the one hand he inveighs loudly against 
the national bank system and advocates the issue of 
greenbacks in place of bank notes, and on the other 
hand he not only desires specie payments, but recog¬ 
nizes the impossibility of returning us to that condi¬ 
tion unless we stop issuing irredeemable paper. This 
is highly inconsistent, and Mr. Johnson has always 
desired the people to believe that consistency was his 
strong point. As we have something to say in answer 
to one of the points he made, we copy the telegraphic 
abstract of his remarks on the currency question:— 

Mr. Johnson then explained his objections to the 
present national banking system, saying that the bank¬ 
ers received 16 per cent, of the capital invested in 
tlieir business, and in the exigencies of trade, much 
more sometimes. [A voice—**A man gets out of pay¬ 
ing taxes on money invested in Government bonds, 
too, don’t he ?”] Mr. Johnson—“Yes, sir. Thank 
you for the suggestion. If, instead of banking upon 
bonds, we issue greenbacks bearing no interest, and 
left tne bonds placed on deposit, we will save paying 
six per cent, interest on §460,060,000, making §24,- 
060,600. Let us quit talking about parties, and let us 
talk about these great questions, and let party serve 
the country instead of having party served by the 
country. The feasibility of managing our currency 
to correspond with the constitutional standard may be 
seen by reference to a few facts derived from our 
commercial statistics. The aggregate product of 
precious metals in the United States, from 1840 to 1867, 
amounted to §1,174,000,000, while for the same period 
the net exports of specie were §741,000,000. This 
shows an excess of product over net exports of §433,- 
000,000. There are in the Treasury §103,407,085 in 
coin. In circulation in the States on the Tacific coast 
there is about §40,000,000, and a few million in na¬ 
tional and other banks, in ail less than §60,000,000. 
Taking into consideration the specie in the country 
prior to 1840, and that produced since 1867, and we 
have more than §30,060,000 not accounted for by ex¬ 
portation or by the returns of the Treasury, aDd, 
therefore, most probably remaining in the country. 
These are important’facts, and show how completely 
the inferior currency will supersede the better, forcing 
it from circulation among the masses, and causing it 
to be exported as a mere article of trade to add to the 
money capital of foreign lands. They show the neces¬ 
sity of retiring our paper money, that the return of 
gold and silver to the avenues of trade may be invited, 
and demand created which shall cause the detention at 
home of at least so much of the productions of our 
rich and inexhaustible gold-bearing fields as may be 
sufficient for the purposes of circulation. It is unrea¬ 
sonable to expect a return to a sound currency so long 
as the government and banks, by continuing to issue 
irredeemable notes, fill the channels of circulation 
with depreciated paper. Notwithstanding a coinage 
by our mints, since 1846, of eight hundred and seventy- 
four millions of dollars, the people are now strangers 
to the currency which was designed to their use and 
benefit, and specimens of the precious metals, bearing 
the national device, are seldom seen, except when 
produced to gratify the interest excited by the novel¬ 
ty. Through all ages and in all countries, people 
have held gold and silver to be valuable. I don't care 
what shape it is in, whether round or fiat, in money 
or in ingots, it will bring its full value in every part 
of the globe; and it would almost seem as if Provi¬ 
dence designed it for universal circulation.” 

It is not for us to defend the national banks, nor to 


complain of others for abusing them. It is only just 
to them, however, to say that the assertions made by 
Mr. Johnson are not true. They do not receive six¬ 
teen per cent, dividend on their capital. The average 
earnings and dividends of all the banks in the United 
States for a series of years past, the year ending in 
each case with March the 1st, have been as follows: 


Year Earnings per cent. Dividends per cent. 

1870 .11.18 10.58 

1871 .10.40 10.14 

1872 .10.02 10.03 

1873 .10.77 10.34 


Six months to Sept. 1 , ’73 . 5.46 6.09 

These are figures taken from the last report of the 
comptroller of the currency. From the same docu¬ 
ment we learn that the dividends made by the Tennes¬ 
see banks have only twice, out of nine times, reached 
the rate of sixteen per cent. Even these amounts are 
subject to a heavy deduction for taxes which the hold¬ 
ers of stock cannot evade. Now ten per cent, or 
twelve per cent, is not a high rate for a bank to pay. 
In England the rate of interest is only half as high on 
the average as it is in the American cities. Yet the 
four leading joint stock banks of London pay annu¬ 
ally dividends amounting to twenty per cent, of 
their capital, and carry a large sum to surplus besides. 
And the Bank of England, burdened as it is with du¬ 
ties from which other banks are free, pays an average 
dividend of ten per cent. Mr. Johnson adopted the 
suggestion that investments in United States bonds, are 
relieved of taxes. Private persons are so relieved, but 
banks are obliged to pay among other taxes one per 
cent, on their circulation, and stockholders are com¬ 
pelled to pay local taxes besides. The internal reven¬ 
ue paid by the banks to the national treasury in the 
last fiscal year amounted to §3,337,0 )). As for the sug¬ 
gestion that we can save six per cent, interest on §406,- 
060,000 by issuing one kind of irredeemable paper 
money for another kind, neither kind drawing inter¬ 
est at all, is of a piece with the ex-President’s policy, 
advocated toward the end of his term, of declaring 
the payment of interest on the five-twenty bonds to be 
a payment of so much towards the principal. 

Governor Dix spoke briefly at Utica last week, and 
in the course of his remarks thus tersely expressed the 
feelings of all advocates of hard money: “We need a 
currency invariable in its value, for if to the fluctua¬ 
tions in prices which are inseparable from a superabun¬ 
dant or a scanty supply of products are superadded 
the fluctuations of a medium of exchange which does 
not conform to the universal standard of value, we 
shall be the sport of every adverse financial breeze 
that blows, and be in the same danger as a ship at sea 
without a rudder.” 

It was lately announced that the redemption of na¬ 
tional bank notes by the Treasurer would be fully re¬ 
sumed on Tuesday next. A still more recent despatch 
hints at new difficulties and intimates doubts whether 
redemption can be resumed at an early day. It is a 
good sign that the amounts offered, even while the ma¬ 
chinery was not in working order, have gradually in¬ 
creased. On one day last week the amount was §375,- 
000, which is quite the average of the season before 
Mr. Spinner was overwhelmed by the amount of work 
thrust upon him. The ruling that the sums needed to 
keep the five per cent, fund good, might be forwarded 
in the shape of national banknotes, has been reversed. 
The new rule is that banks may be credited on the five 
per cent, fund with sums voluntarily sent forward for 
redemption, but that when a call is made upon them 
they must send greenbacks or drafts payable in green¬ 
backs. That is a far more sensible system than the 
one it supersedes. We learn that Mr. Spinner has be¬ 
come convinced that the five per cent, on circulation 
which banks are required to furnish gives altogether 
too narrow a margin for the redemption division to 


work upon, and Congress will probably be asked to 
amend the law in that regard. Attentive readers of 
the Record may remember that we made this discov¬ 
ery before the redemption machinery had been in op¬ 
eration three weeks. In No. 25, for July 25, we pre¬ 
dicted that the five per cent, would be found insuffi¬ 
cient and also that the fund would be exhausted if 
bank notes were taken from banks to make the fund 
good. 

The last New York bank statement shows a further 
decline in the reserve and an increasing use of money. 
The deposits decreased, as compared with the previous 
week, almost three and a half millions, and specie and 
legal-tenders each exhibit a decline of a million and a 
half. Yet the reserve is still twenty-two millions in 
excess of the requirements of the present law, and fif¬ 
teen and a half millions in excess of the requirements 
of the old law. 

Spirit of the Press. 

[Springfield (Mass.) Republican.] 

The operation of the currency law has been to dem¬ 
onstrate the groundlessness of the cry for more money, 
beyond the most sauguine expectations. Since the 
passage of the act (June 20), only §1,224,000 of cur¬ 
rency has been issued to new banks, and §465,000 to 
old, while the withdrawal of bonds by existing banks 
rises to §0,913,000, and the amount of currency thus 
extinguished, to §7,710,000. The amount of bank¬ 
notes withdrawn is, therefore, more than four times 
the amount newly issued. A large proportion of the 
withdrawals are, strange to say, from the West. The 
amount of the withdrawals from Illinois far exceeds 
the new investments in banking in the same State. The 
sum of §1,224,000, above mentioned as issued to new 
banks, is distributed among 24. Tne average amount 
of their circulation, therefore, does not reach §50,000, 
but probably they will call for more as they get estab¬ 
lished in business. There are 12 more applications on 
file. 

[New York Tribune.] 

The last public debt statement is again unfavorable. 
The decrease is only §435,418, which is very small, 
when we consider that September is a month which 
gives very heavy receipts from customs. The actual 
receipts at the Sub-Treasury in New York from this 
source have been greater both in August and Septem¬ 
ber than at any other time since the panic. They 
have been in 

August.$12,058,813.50 

September. 11,719,133.96 

Yet the Public Debt has decreased but §2,062,178 in 
those sixty-one days. Why is it that the retrench¬ 
ment for which we are told to give devout thanks to 
the Forty-third Congress does not show itself? If the 
two most active mouths in the whole year at the cus¬ 
tom houses produce only two millions of surplus rev¬ 
enue, how are we to expect any surplus at all for the 
next four months to come ? Or is this a mystery of 
book-keeping ? Was the small decrease of the Public 
Debt during the fiscal year 1872-3 a mere book-keep¬ 
ing balance ? We do not express an opinion on that 
point, but we confess we cannot understand the course 
which things have taken lately. Comparing 1874 with 
1873, the recent monthly decreases of the debt con¬ 
trast as follows: 


1874. 1873. 

May.$4,456,838.92 $3,525,282.50 

June. 2,180,196.94 2,145,159.89 

July. 1,282,866.13 370,518.95 

August . . 1,626,760.69 6,752,829.29 

September. 435,417.92 1,901,467.16 


We cannot explain the above figures ou any hypoth¬ 
esis of economy or on any difference of revenue. 

[From the Pottsville (Pa.) Journal.] 

The Philadelphia Press and other journals are advo¬ 
cating the re-election of Hon. John Scott to the United 
States Senate. We believe Senator Scott to be an hon¬ 
est man, and in some respects a good Senator, but at 
the last session of Congress we were sorry to find that 
Senator Scott, on the currency question, recorded his 
vote in every instance in favor of the money power, 
against the producing classes of this State and the 
country. The great contest now going on in this coun¬ 
try is between the producers and the money power, 
which has ruled the country so long, and is crush¬ 
ing out the spirit of industry throughout the country, 
and robbing the producers of nearly all the profits they 
make in the productive industry of the country, which 
is the great and leading interest of the country, and 






































127 


THE FINANCIAL RECORD. 


on which the government itself depends for its sup¬ 
port. We, as a representative of the productive indus¬ 
try of the country, are opposed to the re-election of 
any Senator or Representative in Congress who sustains 
the money power against the producing classes and 
the productive industry of the country. 

[From the St. Louis Despatch.] 

Since the adjournment of Congress anything like an 
animated discussion of the financial question has not 
been maintained. The necessity, however, for more 
money remains just as paramount as it did the day the 
Secretary of the Treasury was implored by the capi¬ 
talists of the East to release the $44,000,000 of reserve. 
There has been no diminution of the pressure. The 
wants of the country are greater now than then, there 
is less confidence now, the future is not so encouraging 
now, and the madness of contraction now would be 
simply criminal, whereas before it might have been 
only stupidly wicked. 


The Two Sides of the Question. 

I. RESUMPTION. 

[From the Chicago Times.] 

It so happens that the detriment to “business inter¬ 
ests,” which is apprehended as a result of advancing 
the value of paper from 91 cents on the dollar to par 
may be wholly averted; just as the detriment to the 
interests of creditors might have been averted when 
the process of inflation was going on. All that is neces¬ 
sary is to provide by law that all debts shall be paid 
on the same value basis on which they were contract¬ 
ed. That done and specie payments might be resum¬ 
ed in a day without the smallest injury to debtor indi¬ 
viduals or communities, and even with advantage to 
them. If a man owes §1000 which he borrowed when 
greenbacks were worth 90 cents on the dollar, let him 
be discharged of his debt upon.paying $900 in gold, or 
its equivalent. There is no difficulty about that, and 
there is no reason why debtors need suffer from instant 
resumption. But even in the absence of any such pro¬ 
vision of law, debtors would suffer but little. Since 
the panic of last September, prices have fallen nearly 
to a specie basis. In other words, paper has advanced 
in purchasing power over commodities in general 
nearly to par with specie. To travel the rest of the 
road to resumption would make but little difference 
with the purchasing power of greenbacks, and conse¬ 
quently would not affect the interests of debtors to 
any considerable extent. If Senator Sherman and 
some other professed resumptionists are right in sup¬ 
posing that the volume of currency would be increased 
rather than diminished by resumption, debtors would 
be benefited instead of injured by that step. Noth¬ 
ing could be more absurd than for men of that way of 
thinking to talk about protecting debtors by a slow 
advance to specie payments. They are unquestionably 
in error, however. Resumption does necessarily in¬ 
volve some increase in the value of paper, and, there¬ 
fore, some hardship to debtors, unless they are pro¬ 
tected in the way above suggested. But the hardship 
would be more than counterbalanced by the substitu¬ 
tion of a stable for an unstable standard of value. 

Probably we shall not for some years see a more fa¬ 
vorable time for resumption than the present. As a re¬ 
sult of the panic of last year prices have dropped nearly 
to a specie basis. Large amounts of paper currency 
are lying idle in bank vaults, and its instant retirement 
and destruction would not be felt as contraction at all. 
In fact it would not be contraction. A year hence it 
may be different. All this paper now idle may be active 
once more, stimulating speculation, inflating prices, and 
creating an obstacle in the way of resumption as great 
as existed five years ago. It is much to be re¬ 
gretted, therefore, that Congress failed to adopt re¬ 
sumption measures at the last session. Had it done 
that, instead of wasting, and worse than wasting, time 
in devising measures of inflation, we might have been 
at the goal of specie payments by the first day of Jan¬ 
uary, 1875, or even sooner. Perhaps it may not be too 
late to take steps in the right direction when Congress 
reassembles in December. The action of political 
conventions in nearly all parts of the country during 
the past summer has made it apparent that a great 
majority of the people are in favor of early resump¬ 
tion, and the prospect is that the fall elections will 
make this fact so plain that nobody can fail to see it. 
The Logans and Mortons will not be so noisy or influ¬ 
ential when Congress re-convenes. They have been 
remarkably quiet thus far during the campaign, and 
they will be still more so after it is ended. The friends 
of honest money will do well to govern themselves in 
accordance with this prospect. They will do well to 
mature a measure of resumption and have it in readi¬ 
ness to introduce and press to its passage as soon as 
Congress meets. Members of both Houses are learn¬ 
ing something by contact with their constituents, and 
may not be unwilling to embrace an early opportunity 
to redeem their reputations not only as representatives 
of the people, but also as economists and statesmen. 
Let the friends of honest money recognize the fact that 
“as soon as possible without injury to the business in¬ 
terests of the nation” is as soon as possible, without 
any qualifying terms whatever, and act accordingly. 


II. INFLATION. 

[From the Richmond Whig.] 

The country is in a strange condition. The bulk of 
currency is in the hands of a small section of the 
country, which produces no value, and lives and flour¬ 
ishes on the profits of money. The other two sec¬ 
tions—the great West and the South—which are the 
main producers of national wealth—have a very small 
portion of the currency, not enough for prosperous 
industry or their daily operations. The small section 
which has monopolized the currency, without party 
distinction, are eager and clamorous for legislation, 
which will enhance the currency in their pockets, to 
the depreciation of every other man’s property. They 
are the champions of “H ird Money”— the only “hon¬ 
est money,” they say, and they boastfully proclaim 
themselves the only “honest men.’’ We do not be¬ 
lieve a more impudent pretension was ever advanced 
by any but freebooters and highwaymen, and the pre¬ 
tension of the one is just on a par with the other. 
And what is singular, they both term themselves 
“honest” men—which puts them on all-fours in name 
as well as fact. And “honest” men they are. They 
seek by act of legislation—no matter how obtained— 
to double or quadruple their property (money), while 
they rob every other man, paralyze the National in¬ 
dustry and spread ruin through the land. 

It will be seen that the Grangers ignore the sacro¬ 
sanct character of specie, and advocate a currency in 
paper issued directly by the National Government at 
a very low rate of interest—the interest to go to meet 
the indebtedness and support of the Government. 
This is the same system which prevailed in Pennsyl¬ 
vania before the Revolution, and was highly com¬ 
mended by Dr. Erankiin. It is intensely national; 
and we hive heard surprise expressed that that fea¬ 
ture of it had not commended it to General Grant, 
who is the very incarnation of nationalism. General 
Grant has a great many things to think of, and may- 
veil be excused from thrusting himself forward to 
solve financial problems; but when he comes to see, 
as he must do, that the aid of the government is in¬ 
dispensable to revived industry and national prosper¬ 
ity, we trust he is not the man to be wanting to the 
requirements of the situation and the demands of pa¬ 
triotism. 


American Commerce. 

[From the N. Y. Tribune.] • 

The record of our foreign commerce for the fiscal 
year 1878-4, is in many respects a remarkable one, de¬ 
serving attention for the light it throws on the opera¬ 
tion of important principles and on the future of busi¬ 
ness generally, internal as well as external. The fol¬ 
lowing table gives the aggregate gold values of the im¬ 
ports, exports, and re-exports of the United States for 
the last six years: 


Year. 

Imports. 

Exports. 

Re-exports. 

1808 9. 


§318,038,624 

§25,173,414 

1869-70.... 


420 518,951 

30,427.124 

1870 1 .... 


513,044,273 

28,459,899 

1871-2. 


501,285,371 

22,709,749 

1872-3. 


578,938,985 

28,149,511 

1873-4. 


029,252,156 

23,780,333 

The great 

increase of the 

exports is especially to be 

noted. The 

above amounts 

include the 

imports and 

exports of gold and silver coin and bullion 
as follows: 

i, which were 

Year. 

Imports. 

Exports. 

Re-exports. 

1808-9. 


§42,915,966 

§14,222,414 

1809-70_ 


43,881,8G1 

11,271,804 

1870 1. 


84,403,359 

- 14,03t ,029 

1871-2. 


72,798,240 

7,079,294 

1872-3. 


7.;,905.546 

10,703,028 

1873-4. 

• .... 28j464,yQ(> 

59,099,086 

6,93.1,719 


Adding together the exports of domestic and foreign 
specie and bullion and subtracting the imports, we 
find that the United States have contributed in the 
last six years no less than $318,700,000 to the stock of 
precious metals in foreign lands. Yet we are told that 
it is out of the question for the United States to have 
a paper currency convertible into the precious metals 
on demand! It lies within the power of the United 
States Treasury at any moment to stop this outflow of 
specie, and turn the current the other way. By merely 
stopping the regular weekly purchases of greenbacks 
and allowing the surplus revenue from customs to ac¬ 
cumulate in the Treasury, gold would be drawn from 
the Bank of England to New York within ninety days. 
If Congress will authorize Mr. Bristow to redeem and 
destroy, between this and February, 1876, eighty-two 
millions of greenbacks or four millions a month for 
the next twenty months, and at the end of that time 
to withdraw the fractional currency, our word for it 
the exportation of specie wjjl be checked and silver 
and gold will circulate in the United States as freely 
as they did before the war. 

If the reader will turn back to the first table he will 
see that the imports, which for the four years 1868-72 
rapidly increased, received a check in 1872-3, and in 
1873-4 fell $75,000,000 below those of tile previous 
year, after allowing for the increased amount of spe¬ 
cie and making the comparison with merchandise 
alone. The great decrease in the last year is to be at¬ 
tributed to the panic, but the retardation in 1872-3 was 
owing to the increased production here of manufactur¬ 


ed goods, resulting in lower prices and the partial ex¬ 
clusion of foreign articles from our markets. After 
the panic this exclusion became still more complete. 
It would be rash, however, to suppose that it will be 
permanent. The following table, giving the values 
for the last three years of the five leading classes of 
manufactured goods imported into the United States, 
will show how powerful has been the operation of the 

influences we have mentioned: 

1871-2. 1872-3. 1873-4. 

Iron and Steel... §55,540,188 $59, 08,388 $33,713,455 
Cotton Goods ... 35,307,447 35,201,317 28,183,878 

Woolen Goods... 52,408,471 51,075,402 40,882,901 


Silk Goods ...... 30,448,018 29,989,809 23,997,301 

Linen Goods. 21,220,496 20,428,315 17,473,70o 

Total.S200,925,220 §196,0 3,351 §150,251,300 


Comparing 1873-4 with 1871-2, the falling off is 
twenty-five per cent, and the falling off in quantities 
is probably grealer still. It is important to notice that 
the imports of these manufactures had begun to decline ' 
months before the panic, and it may be inferred from 
this fact that the present dull market for imported iron 
and steel and dry goods is in part the effect of the in¬ 
creased capacity of our home establishments to supply 
the demand. Un the other hand the steadiness in the 
values of the imports of tea, coffee, sugar and molas¬ 
ses is remarkable: 


1871-2. 1872-3. 1873-4. 

Tea .§22.943,575 §24,406,170 §21,212,334 

Coffee. 37,942,225 44,103,814 55,040,965 

Sugar, unrefined. 79 129,059 77,952,499 77,440,459 

Molasses. 10,627 511 9,901,045 10,911,189 


Total.§150,042,370 §156,423,528 §164,004,947 

The quantity of sugar imported increased from 649,- 
163 tons in 1872-3 to 710,834 tons in 1873-4, so that the 
decrease in value is far from signifying a falling off in 
the consumption. 

The increase in the exports of domestic products, 
unfortunately, is not likely to be maintained the cur¬ 
rent year. The article of greatest value is, as usual, 
cotton. The following table gives the values, in cur¬ 
rency, and number of thousand pounds exported in 
the last three fiscal years: 


'1871-2. 1872-3. 1873-4. 

Value.§180,084,595 §227,243,009 §221,223.680 

Quantity. 933,537 1,200,004 1,358,002 


It appears that the cotton which in 1871-2 and 1872-3 
brought us 19 cents a pound, last year brought less 
than 16. The present crop, if, as reported, it is a 
short one, will probably sell for more per bale as the 
true condition of the supply becomes better known. 
The commodity which comes next to cotton in our 
exports is wheat. The values and quantities of the 
wheat and wheat flour exported in the last three 
years are as follows: 


1871-2. 1872-3. 1873-4. 

Wheat.§38,915,060 §51,452,254 §101,421, 59 

Wheat Flour. 17,955,084 19,381,b64 29,307,0 4 


Total.§50,870,744 §70.833,918 §130,788,553 

Bushels of Wheat. 20,423,089 39,204,285 71,039,928 

Bbls. of Flour. 2,514,535 2,562,086 4,094,094 

The exports of wheat in 1872-3 were larger than 
those of any preceding year, and in 1873-4 tuey are 
nearly double, in both quantity and value, those of 
1872-3. We anticipate for the current year a falling 
off of about $50,OJU,000 in the value of the exports of 
wheat and wheat flour. Perhaps the most available 
outlet for a part of our surplus wheat will be found in 
turning it into flour and sen.ling it to the West Indies 
and South America. Otherwise millions of bushe s 
will have to be stored. The prospect for a market for 
our provisions is better. Tne aggregate value of this 
class, comprising bacon, hams, beef, pork, butter, 
cheese, lard, fish, &c.. was $59,696,670 in 1871-2, $78, 
197.241 in 1372-3, and $78,328,226 in 1873-4. The 
value of the exports of petroleum, naptha, &c., as com¬ 
pared with last year, is stationary at about forty mil¬ 
lion dollars, though the quantity shows a great increase. 

Tobacco and its manufactures have risen from twen¬ 
ty-five to thirty millions. Manufactured goods, though 
of minor consequence in the table of exports, show 
a large increase, which is partly the consequence of 
the market at home being overstocked. Upon a gen¬ 
eral view, the total volume of our foreign trade seems 
not likely to be greatly changed the current year. 


Sound Doctrine in Missouri. 

Samuel T. Glover, a prominent Democrat of Mis¬ 
souri, who will go with the People’s Party there along 
with Carl Schurz and, other friends of honest money, 
has written thus to a committee of that party: 

Irredeemable paper currency has had one uniform 
history. It has always been more liable than any 
other money to shocks and panics. Two words which 
have told its story from the beginning will tell it to 
the end.. These words are “inflation” and “collapse.” 
Tne argument against its use is of the simplest char¬ 
acter. In the first place, it has no intrinsic value in it¬ 
self. In the next there is nothing certainly valuable 
behind it. .The extent of its quantity is as uulmmed 
as that of the materials of which it is made. It is as 
liable to fluctuation as the conceits and passions of 
men. This is the reason why no one will take it from 
choice, and its circulation is always compulsory. The 
















































THE FIHAHCIAL RECORD. 


128 


truth is, this specie of money is never issued till gov¬ 
ernment has nbthing left with which to pay its debts 
and having nothing else, it institutes a machine inside 
the treasury to print its mere promises to pay; and 
knowing these promises will not be received as money, 
because they ought not to be so received, it falsely 
declares them equal 10 coin and compels people to ac¬ 
cept them against their will. Here is the basis upon 
which the circulation of irredeemable paper depends. 
The government says to the people, You shall take 
this paper or nothing. It had no intrinsic value and 
may never bring you anything that has intrinsic value; 
but you shall take it or go unpaid. This is not an hon¬ 
est basis. Its elements are force and tiction, and no 
one ever submits to these if he can help himself. The 
cheat is transparent. If the paper was equal to gold, 
in fact there would be no law to force it upon the peo¬ 
ple. This sort of money has most generally been the 
creation of revolutionary governments, and has 
sprung, not from considerations of justice and equity, 
but from the necessities of distress and the law of the 
strongest. 

Believing as the Democratic Convention does, that 
nothing more is requisite to make legal-tender notes 
equal to gold than a few words in an act of Congress, 

I am not surprised at their purpose to add three hun¬ 
dred and fifty millions more to their circulation. With 
their view of finance, I do not see why the new issue 
should not be one thousand or two thousand millions, 
as it would all be gold as soon as made receivable for 
duties. With their views a return to specie payment 
would be a futile and useless thing! This is probably 
the reason they have made no allusion to the subject. 
With my views, the inflation of this already vicious 
and dangerous currency is the open road to the ruin of 
all industrial, commercial and financial interests, and 
there is no safety in any policy which is not intended 
to lead us back in due time to the specie basis. Oppos¬ 
ed to this unreasonable and desperate programme of 
the Missouri Democratic Convention, stands the clear 
and statesmanlike platform of the Democrats of New 
York, who have just nominated Mr. Tilden as their 
candidate for Governor. It is in these words: “Gold 
and silver the only legal-tender; no currency incon¬ 
vertible with coin; steady steps towards specie pay¬ 
ments; no steps backwards.” 

H iving expressed to you, gentlemen, without reserve, 
my fixed opinion of the dangerous character of any 
form of paper currency not convertible into coin at the 
pleasure of the holder, I have to announce my disap¬ 
pointment in not finding in your platform any positive 
or satisfactory expression on this vital question. You 
have said “any further contraction of the national cur¬ 
rency would be detrimental to the producing classes,” 
and you “oppose any step in that direction.” But 
you say nothing on the question of inflation. Nothing 
in respect to the evils of an irredeemable paper cur¬ 
rency. You do say you favor as early a return to spe¬ 
cie payment as can be effected without disaster, but 
you do not indicate how this can ever be effected, while 
you oppose “any step towards a contraction of the 
national currency.” 

Upon a question fraught >vith weal or woe to the mass¬ 
es, a people’s platform should send forth no uncertain 
sound; and I have again to express my regret that 
while the Democratic Convention has attempted to 
commit the party to the fatal error that the difference 
between irredeemable paper and specie is a very trivial 
one, and to an indefinite enlargement of the irredeem¬ 
able paper system, and is entirely silent upon the sub¬ 
ject of resumption at any time, your own platform is 
• painfully equivocal and uncertain upon this grave 
topic. ___ 

Financial Education. 

BY PROF. W. G. SUMNER. 

In the United States’the financial questions at issue 
imperatively demands a clear, definite, and final solu¬ 
tion. The public discussion, indeed, does not as yet 
promise much in the way of such a solution. Views, 
opinions, doctrines, and schemes of the utmost diver¬ 
sity and of the most contradictory nature, are before 
the public. There is as yet no discussion in the prop¬ 
er sense of the word. There are no common grounds 
in fundamental doctrine. The premises themselves 
are disputed more tenaciously than the inferences. 
Tuere is no agreement as to the methods of investiga¬ 
tion, the nature or the weight of the pertinent argu¬ 
ments, the sources to which we must look for light. It 
follows of necessity that the results are diverse to the 
last degree. Instead of an orderly discussion we have, 
therefore, something more like the outcry of a mob,* 
each shouting for himself and no one listening to anoth¬ 
er. In one point of view this is discouraging enough; 
but we cannot forget that out of this turmoil the pop¬ 
ular education must come. It has been sometimes 
said that Democracy was on trial during the war; 
but Democracy is going through a trial now, far more 
severe and searching than any that comes under the 
enthusiasm and passion of war. To educate millions 
of voters to sudicient knowledge of a technical and 
scientific subject, involving self-denial, firmness, and 
perseverence, in the presence of dull and passionless 
peace, and for a good wuich is not immediate but re¬ 


mote, involves the severest test to which popular in¬ 
stitutions have ever been put, one which hitherto they 
have never endured. By this time, however, it must 
be evident that this is what we have got to do. The 
wish, real or supposed, of a numerical majority of the 
population, governs legislation, and governs the out¬ 
come of this matter. A legislature strong in the com¬ 
prehension of sound principles, bold in the assertion 
of them, ready to stake individual interests for the 
public good, might no doubt lead and remold public 
opinion; but we all know that we have not got this, 
and that we cannot get it until we work lower down 
on the created power which mikes legislatures. In 
this point of view the popular agitation and discus¬ 
sion, unmethodical as it is, and little adapted to satis¬ 
fy a scientific thinker, is a great good, for it is carry¬ 
ing on a work of education to which we must look in 
the last resort for the desired result .—Journal of Social 
Science. 

The Currency Reformers and Their 
Movements. 

[From the N. Y. Financial Chronicle.] 

We are approaching the period of the year when in 
anticipation of the meeting of Congress, the advo¬ 
cates of currency reform usually begin to press their 
schemes upon the public attention. For several rea¬ 
sons it is probable that our newspapers will give us 
less of this kind of discussion than for some years 
past. The public mind ft less receptive to the desire 
for rash currency experiments, and there is a general 
disposition among thoughtful men to wait and watch 
the result of the important legislation of last session 
before venturing any further step towards specie pay¬ 
ments. 

No intelligent observer can fail to regard as of the 
highest possible moment, the recent legislation of Con¬ 
gress in regard to the* currency. The intent of that 
Congressional action is well known. Its first object 
was to stop the inflation of greenbacks; its second, 
to stop the inflation of national bank notes. If both 
these purposes can be accomplished, the country will 
be saved from the mischiefs of excessive paper-money 
issues. We can not advance towards specie resump¬ 
tion till these two points are gained, and made a basis 
of further reforms. • 

As to greenbacks, the law of June, 1870, declared 
that the maximum issue is 882 millions. If there were 
any doubt as to whether greenbacks, retired since the 
war, could be re-issued to the war limit of 400 millions, 
that doubt exists no longer. Congress has put an end 
to all such excuses for augmenting the currency, or 
for agitating the public mind on the subject. The 
only power which the constitution gives to Congress 
over the geenbacks is to lessen the amount. This 
power has been exerted in reducing the 400 mi lion 
limit to 382 millions, beyond which sum Congress has 
now no - authority to augment the greenback issues. 
The next change, the only one to which the power of 
Congress is competent, is to make a further reduction. 
Congress, in other words, lias the power to retire 
greenbacks and to cancel them to any extent; but 
when they are once retired and cancelled, Congress 
has no power to re-issue them except in time of war. 
We waive here as irrelevant to the present argument 
all discussion about Mr. Richardson’s action a year ago 
in raising funds after the panic by the issue of 26 mil¬ 
lions of unauthorized greenbacks. Public opinion has 
dealt severely with that officer, and there will be little 
danger that he would find imitators, even had Con¬ 
gress failed to prevent such a result by the positive 
statutory prohibition of further issues. 

If nothing more than this had been accomplished by 
the Act of June, 1874, that law would have been justly 
regarded as the most important currency statute since 
the Legal Tender Act of February, 1862. But, as we 
said, there is a second reform provided for which is of 
equal need and of superior difficulty. This work is 
the conferring of elasticity upon the national bank 
note system. One of the worst defects of our paper- 
money is its rigid inelasticity. President Grant expos¬ 
ed this evil in a very remarkable letter which was pub¬ 
lished last year, and doubtless had much to do with 
maturing the legislative remedy we are discussing. 
Financial science prescribes as one of the fundamen¬ 
tal requisites of the currency that it should be an effi¬ 
cient instrument for performing the exchanges of the 
country. But these exchanges vary enormously at 
different seasons of the year; hence the currency 
should vary also. In the fall, 50 millions more cur¬ 
rency is used than in the idle months of summer. 
Adam Smith compared the currency system to a road 
over which the exchanges travel. Modernizing his 
simile we may compare our currency organization to 
the system of railroads. As the railroads want less 
rolling stock at one season than another, so do our 
banks require less currency at one season than another. 
Now if some law were passed compelling our railroad 
companies, in dull times, to carry over their lines and 
keep in full operation the maximum amount of rolling 
stock which they ever required at the busiest season, it 
is easy to see what mischief and annoyance such a 
law would cause. But this difficulty would be precisely 
analogous to that which is caused by our bank note 


legislation, and for which General Grant was so anx¬ 
ious to find a remedy. 

The remedy which Congress decided to try was the 
redemption of bank notes by means of a Bureau estab¬ 
lished for that purpose in Washington. Experience 
and history agree in proving that such a redemption 
machinery, if efficiently conducted, will do all we want. 
The only question is whether it can be efficiently car¬ 
ried on. It is well know to our readers that for sev¬ 
eral years we have persistently argued this question in 
the affirmative. We contend that the redemption mech¬ 
anism is not only indispensable to the permanence and 
efficiency of our banking system, but that it can be effi¬ 
ciency conducted. We do not partake of the doubts 
which are so ostentatiously paraded on this subject. In 
some minor details the redemption bereau is less perfect 
than we could have wished. But in all its vital parts it is 
strong and sound. Its present troubles are trivial and 
temporary. In Mr. Spinner it has a resolute, capable 
chief, whose experience and energy are a pledge of 
final success. 

For these reasons, as well as for others of a more 
general nature, we do not look for so broad or exhaus¬ 
tive a discussion of currency reform either in or out of 
Congress during the coming .session. Still there are 
indications that the army of currency reformers will 
not remain wholly inactive. Already their advanced 
guards are coming in sight. The inflation wing, and 
the contraction wing of that army are both making^ 
demonstrations in the West under the leadership of 
Mr. Pendleton on one side, and Mr. Carl Schurz on the 
other. Among the younger leaders, who are attracting 
notice, is Mr. William YValter Phelps, of this city, in 
harmony with whose views is reported to be the sug¬ 
gestive paper on specie payments which appeared on 
Wednesday in the New York Tribune , from the fertile 
pen of Mr. Charles Nordhoff. This thoughtful essay 
is full of hints which may be extremely valuable in a 
more advanced state of the discussion, when the coun¬ 
try has had time to make good the reforms already ac¬ 
complished, and is thus prepared to take a further step 
towards the goal of specie resumption—a goal which, 
as history proves and as Mr. Nordhoff explains, is 
neither so near nor so easy to win, as some of our shal¬ 
low thinkers have rashly supposed. 


How is This for Inflation? 

The following handbill, sent to us from Col. Rich¬ 
ardson’s stamping ground, Quincy, Ill., shows what 
the worshipers of the greenback have been doing 
there: 

MASS MEETING 
Of the Friends and Advocates of 

GREENBACKS AS A LEGAL TENDER AND CURRENCY OF THE 
COUNTRY. 

No more B inks to Swindle the People!—Grand Barbecue and 
Dinner! — Ten Thousand Persons Expected ! 

All citizens of the State of Illinois who refuse to be deliv¬ 
ered to the sorehead, golden calf party, organized by Hesing 
and Palmer, at Spri >glield, 111., oa the 26th of August, and 
wiio are opposed to their nefarious scheme an t predatory spir¬ 
it of plunder and wholesale robbery, and who are willing to 
unite with us in resisting the attempt to deliver the country 
into the hands of wildcat banks and money lenders, and assist 
by their votes in upliol ling our present currency and extend¬ 
ing the use of the legal tender treasury notes to the payment 
of all taxes, duties and imports, are hereby earnestly invited to 
meet at the Quincy Fair Grounds, on Thursday, October 1, 
1874, at 11 o’clock, to concert measures for our common relief 
and protection. . 

That as much time as possible may be devoted to the busi¬ 
ness purposes of the meeting, ample provisions have been 
made to feed twenty thousand persons free of cost. 

In case of bad weather, the Fair Grounds offer ample shelter 
aud every convenience for conducting the business of the 
meeting without interruption. 

Many distinguished speakers from other States have been in¬ 
vited, and are confidently expected to address the assemblage. 

Committee of Arrangements. —J. T. Bradford, Robt. McCoy, 
Robt. Tillson, Maitland Boon, H. A. Grimmer, F. W. Menke, 
Win. M. Avise, and twenty others. 

The Jacksonville Journal says about this barbecue: 

The “bugle blast” of Richardson and Singleton to 
the faithful Democrats, together with the material in¬ 
ducements of a barbecue, had the effect to assemble 
quite a crowd at Quincy on Thursday, and the further 
effect of causing them to nominate W. A. Richardson 
for Congress on the greenback platform, in opposition 
to Hon. Scott Wike, the regular Hesing-McCormick 
nominee. Another result, perhaps, will be the elec¬ 
tion of a Republican Congressman from the Eleventh. 


Another Sound Platform. 

The Massachusetts Republicans met on the 7th inst. 
at Worcester, and adopted, without a word of dissent, 
as the first plank of their platform, the following res¬ 
olution: 

Resolved , That a sound currency is indispensable to 
national prosperity, and that to this end the nation 
must make its demand and promises to pay equal to 
gold, which is the recognized standard of value in the 
whole civilized world; and that it is further the duty 
of Congress to adopt such measures as shall safely and 
speedily tend to this realization of value, and that no 
inflation of the currency, by adding to the govern¬ 
ment issues should be permitted. 















































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Social Science 


Bulletin. 


THE AMERICAN SOCIAL SCIENCE ASSOCIATION. 


This Association will continue its active work during the year 1875, according to the general plan an¬ 
nounced from time to time during the past year. So far as this plan relates to the establishment of local 
bodies, co-operating with the present Association, it may be gathered from the following votes of the Execu¬ 
tive Committee, passed in April, 1874: 

1. That it does not seem practicable to bring all organizations for the promotion of Social Science existing 
or to be established, to the same precise form and model; but that such as are willing to become auxiliary to 
this Association shall be designated as of three main classes, namely: (1) Branch Associations, similar to that 
at Philadelphia, (2) Local Departments, and (3) Corresponding Committees. 

2. That in the Branch Associations, membership fees and assessments may be regulated according to the 
circumstances of the locality where such Association is formed; but that none shall be considered a Branch of 
the American Association until it shall have paid into our Treasury either the round sum of $300, or the an¬ 
nual sum of $15, or, in lieu of both, the value of $15 a year in publications. In consideration of such pay¬ 
ment, the President, Secretary and Treasurer, or any three members of the Branch Association, whom it may 
designate, shall be admitted as Members of the American Association, and the President shall be, ex-officio, a 
Vice-President of the American Association. 

3. That Local Departments, now existing or to be established hereafter, may adopt special fees and condi¬ 
tions for membership, as the members thereof may choose; but each Department shall pay into the Treasury 
of the American Association not less than $5 annually, in consideration of which its Chairman shall be a mem¬ 
ber of this Association, and, ex-officio, one of its Directors; and every such Department shall report its doings 
to the parent Association as often as once in three months, and once a month if required. 

4. That the Committees of Correspondence may be excused from all assessments, and may have the op¬ 
portunity of obtaining our publications at cost price, or by way of exchange for their own publications, and 
that the same privilege in respect to publications shall be extended to all members of Branch Associations and 
Local Departments. 

This plan has not been finally passed upon by the Association, and is subject to modification in its details; 
the question of accepting it being nowin the hands of a Committee which will report at an adjournment of the 
Annual Meeting of October 14, to be held in Boston, Wednesday, January 13, 1875, to which all members of 
the Association are hereby invited. The following are the o fficers for 1875, elected at the October meeting, 
but to hold office until the Annual Meeting in January, 1876: 


President. 

Theodore D. Woolsey, New Haven , Conn. 

Vice-Presidents. 

Samuel Eliot, Boston. 

David A. Wells, Norwich, Conn. 

F. L. Olmsted, New York. 

H. C. Lea, Philadelphia. 

Rev. Dr. James McCosh, Princeton, N. J. 

J. W. Hoyt, Madison, Wis. 

Charles I. Walker, Detroit, Mich. 

William G. Hammond, Iowa City. 

George Davidson, San Francisco. 

D. C. Gilman, Oakland, Cal. 

W. T. Harris, St. Louis. 

Secretary. 

F. B. Sanborn, Concord, Mass. 

Treasurer. • 

Gamaliel Bradford, Boston, (5 Pemberton Sq.) 
Directors. 

Emory Washburn, Cambridge. 

Charles W. Eliot, “ 

Prof. Benj. Peirce, “ 

S. G. Howe, Boston. 

T. C. Amory, “ 

C. C. Perkins, “ 


J. M. B arnard, Boston. 

R. M. Mason, “ 

J. S. Blatchford, Boston. 

E. E. Hale, “ 

George T. Angell, “ 

J. M. Forbes, “ 

E. W. Hooper, “ 

Mrs. John E. Lodge, “ 

Mrs. S. Parkman, “ 

Mrs. C. H. Dall, “ 

Mrs. Henry Whitman, Boston. 

Miss A. W. May, “ 

Rev. E. C. Guild, Waltham. 

Rev. I)r. E. C. Wines, New York. 

H. Villard, New York. 

Nathan Allen, Lowell. 

Arthur L. Perry, Williamstown. 

Miss Louisa Lee Schuyler, New York. 
Dorman B. Eaton, New York. 

E. Lloyd Howard, Baltimore. 

Henry B. Baker, Lansing, Mich. 

Z. R. Brockway, Detroit, Mich. 

Mrs. W. P. Lynde, Milwaukee. 

Thomas M. Logan, M. D., Sacramento, Cal. 
D. W. Wilder, Topeka, Kan. 


The Chairmen and Secretaries of the Five Departments are to be added to the above list, if not already in¬ 
cluded. They are: 


I. Department of Education, C. W. Eliot, Chairman ; -, Secretary. 

II. Department of Health, Dr. Edward Wigglesworth, Boston, Chairman; Dr. D. F. Lincoln, Secretary. 

IIL Department of Jurisprudence, Hon. John Wells, Boston, Chairman ; James B. Thayer, Cambridge, Sec’y. 

IV. Department of Trade and Finance, David A. Wells, Chairman; Prof. W. G. Sumner, New Haven, Sec’y. 

V. Department of Social Economy, Prof. W B. Rogers, Boston, Chairman; F. B. Sanborn, Secretary. 

The monthly meetings of the above officers are held at the office of the Association, which is also the office 
of the Secretary and Treasurer, 5 Pemberton Square, Boston. The next General Meeting of the Association 
will be held in Detroit, in May or June, 1875. The fee tor membership is $5, and all are invited to become 
members, who feel an interest in our work. 


The aim of the Association is to organize and concentrate forces now working at random. A marked feature 
of the time is the desire to investigate and ameliorate the conditions of human life. But this impulse, too often 
fitful and ill directed, is apt to defeat itself. Thus all competent authorities agree that the overflowing and 
unregulated spirit of charity is one of the most hurtful and dangerous of our social tendencies. The British 
Association, in successful operation since 1857, aims to propose suggestions of reform for the attention of the 
Ministry. Such an agency appears to be much more necessary in this country, not only from the inefficiency 
and unsteadiness of executive government, but from the want of connection between the States. Upon the 
great subjects of Finance, Taxation, Education, Jurisprudence, Health, Charities, Pauperism, Prisons, Rail¬ 
ways, Insurance, Police, &c., &c., not to speak of the lack of system in individual States, there are or may be 
thirty-seven different systems, unconnected and without reference or advantage to each other. To bring into 
closer relations men of special talents and acquirements in different States, and, while excluding frivolities and 
crotchets, to establish general principles as against empiricism in the conduct of society, is the purpose for 
which we ask the sympathy, not only of the friends of humanity, but of every lover of his country. 

Boston, Oct. 22, 1874. 






American and English Curreucy. 

Debate at tiie Boston Social Science Meeting. 

The American Social Science Association, at its 
annual meeting last week in Boston, listened to an in¬ 
teresting debate on Currency, in which Prof. Price, 
an English political economist, gave his view of the 
famous Bank Act of Sir Robert Peel. Our readers 
will peruse his remarks with interest, but we must add 
a word of caution. He says that the Bank Act of ’44 
made the currency safe when it was safe before. But 
he omits to say that it made the currency converti¬ 
ble under all circumstances, which it was not before, 
and which is quite a different thing. Mr. Price farther 
says that undue fuss is made about the currency, be¬ 
cause it enters in so small a percentage into the trans¬ 
actions of business. But in fact all the remaining ma¬ 
terial in such transactions is directly dependent upon 
the currency, is indeed of exactly the same nature, 
that is,what the banks call deposits. The whole ques-» 
tion, therefore, is one of currency. Finally we regret 
to see that Mr. Price maintains one of the most dan¬ 
gerous postulates of the inflationists, that no more 
currency can be issued than the wants of trade re¬ 
quire. The number of hats required is determined by 
the number of heads, because one head can only wear 
one hat. But an article which requires the use of only 
five dollars for its purchase may, by a simple rise of 
price, absorb ten dollars. Additions to the currency 
can no more be distinguished from the original than 
additions of water in a pail. 

REMARKS OF MESSRS WALKER AND BRADFORD. 

Hon. Amasa Walker in opening the debate, spoke 
of the panic of a year ago, which occurred because 
there was a disease in the currency; a false standard 
of value; because the laws of wealth had been vio¬ 
lated. The evils of our currency had been made ap¬ 
parent, but what occasioned them ? It was the act 
of Congress that destroyed the standard of value; 
that made the paper of the United States the stand¬ 
ard of value instea 1 of gold and silver. The conse¬ 
quence was that money was multiplied in quantity. 
We had about §70,000,000 of paper circulation when 
the act was passed, but we went on till we had in a 
very short time §700,000,000. At the same time banks 
were chartered with the very wise purpose of compet¬ 
ing with the government in issuing paper money. A 
more ridiculous measure was perhaps never passed. 
Gold went up at one time to 185 per cent, premium. 
The consequence was that the government had to pay 
double and treble for everything it wanted to carry 
on the war, and he would declare, because it was a 
matter capable of proof, that of the debt of the Gov¬ 
ernment at the end of the war §1,500,000,000 were 
simply inflation. The remedy would seem to be very 
clear at once. If the standard had been destroyed, 
restore it: if there was an excessive volume of cur¬ 
rency—§700,000,000 where there had been but §70,- 
000,000 when we were in a high state of prosperity, 
the matter to be accomplished was to destroy this ex¬ 
cessive currency. That was the one remedy, but it 
should be applied gradually. His plan for effecting 
this was to issue §10,000,000 a month in six per cent, 
compound interest notes, and destroy §10,000,000 of 
greenbacks. Then in three years and a half the green¬ 
backs svould be destroyed and these notes would form 
the circulation. These notes should be convertible at 
the end of two years into five per cent, ten-forty 
bonds. Every person who received them would lay 
them by. That would be the surplus money of the 
country which would thus be hoarded, and at the end 
of two years they would be converted into bonds. 
That would require two years and a half, and it 
would be two years after the last was issued before 
they were refunded. And so it was a process of five 
years and a half, but just so soon as the process be¬ 
gan, just so quickly would the country be on the road 
to resumption. 

Mr. G. Bradford thought the Congress of the United 
States was under the management of the national 
banks, and in their interest. The question was not 
simply by what process we should return to specie 
payments, but to find some power that should battle 
against national banks. And that power could be 
found only in the Secretary of the Treasury. He should 
have more power and a good deal more responsibility. 
But setting aside the question of administration, it 
should be considered on what principles we were to 
start to discover and remedy the evils that existed. A 
very natural process would be to investigate the lessons 
of history to know what had been done by others. 
Now it was well established that no nation had ever 
yet resorted to inconvertible currency without in the 
end repudiating it in part. The question was whether 
we should follow that road or should make an ex¬ 
ception in history. Of our ability there was no ques¬ 
tion. When our five per cent, bonds were selling at 
par and our six per cent, bonds at a premium, it was 
not a question of ability, but of willingness. In clos¬ 
ing, he spoke of the financial system of England, and 
called the attention of the audience to Professor Bona- 
my Price of Oxford University, who was present, and 


who would tell the association something about the 
Bank Act of 1844. 

REMARKS OF PROF. PRICE. 

Prof. Price said he had been asked to speak on the 
Bank Act, a much disputed statute. What it was is 
still unknown even to the people of England, as un¬ 
known as if buried in the very foundations of the earth. 
It must be judged from three distinct and different 
points of view—the ideas of the men who called it into 
existence, the ideas of the banking and commercial 
world respecting it, and what he submitted to be the 
true interpretation of it. It came in 1844. Sir Robert 
Peel and other great authorities were its advisers. 
They had three distinct ends in view—to guard against 
the dangers of country bankers as issuers of notes, to 
act upon speculation in trade, and to control the rate 
of interest and all the great agitations in the money 
market. First, in reference to the country bankers 
Prior to 1844 the issuing of notes was absolutely free 
in England, and every Englishman who liked and who 
could persuade his neighbors to take his notes was free 
to issue tl^em. In some towns the notes were confined 
to the localities where the bankers were known; in 
other cases the bankers enjoyed great celebrity, and 
were well known over different parts of England. 

These country banks, said Prof. Price, came into 
competition with the Bank of England, and one ob¬ 
ject of Sir Robert Peel was to limit the circulation 
and substitute for it that of the bank of England whose 
notes were always safe. This had been done, and 
though there is still a great deal of country paper cir¬ 
culating there could be no new issues after 1844, and 
if any bank stopped issuing, its circulation ceased. 
No new private banker could coine into action, and 
therefore there was a cause at work which would in 
time have extinguished the country circulation. A 
great instance took place the other day in the case of 
the National Provincial Bank of England, which had 
a very enormous country circulation, from which was 
derived considerable profit. Englishmen were old- 
fashioned people, and moved along bit by bit, in a zig¬ 
zagging, jigjog way, and they had not yet got rid 
of an old remnant of a law which forbade any banker 
who circulated notes in the country to bank in London. 
It was a remnant of the wisdom of old times. The 
National Provincial Bank of England found that the 
profits of banking in London would far exceed the 
profits they could derive from the issue of notes, and 
so, like sensible men of business, they chose of two 
profits the larger, gave up issuing notes, and became 
bankers in London, and a great lot of country notes 
were thrown down the abyss. Was it wise to put the 
country bankers down? He affirmed yes. And why? 
Because the issuing of banking notes was essentially a 
public function and not a matter of private trade. It 
was the duty of every government to protect the peo¬ 
ple when they were unable to protect themselves, and 
he could see that a suppression of the country currency 
was demanded. Why was there this necessity? We 
conceived the idea that emigrant passengers could not 
take care of themselves, and so we made laws inter¬ 
fering with the passenger trade; we conceived that if 
men bought guns and took the chance of the seller 
giving them something that could be depended upon, a 
good many people wodld be losing their heads, and 
we thought it was well for the Government to try the 
barrels. So when we found that every banker who 
went into bankruptcy, as the result of unlucky specu¬ 
lation, vitally injured many people who had confided 
in him, we thought that the public should be offered 
protection. 

He now approached his second subject. Around 
this were lots of mist, plenty of cloud, many cross 
ideas. The advisers of Sir Robert Peel thought they 
were going, by this banking act of 1844 to make men 
sensible, to prevent merchants from making unlucky 
speculations, from sending cargoes where they ought 
not to; in short, that they had found the great cure 
for the evils of humanity" by acting upon the currency. 
Really it was something marvelous, these great men, 
bankers who had only to look into their own books to 
see how their customers paid their bills. How did he 
pay his bills ? He had his tailor’s bills to pay, his 
butcher’s bills, gardener’s bills and all sorts of bills, 
and did he touch currency ? He touched current:/for 
small change. The gigantic trade of England was 
worked by a different machine; it was worked by 
checks. He paid his bills in pieces of paper and re¬ 
ceived his income in pieces of paper. What had he 
got to do with currency, the bank note and sovereign ? 
Those wise men seemed to think that the evils of 
speculation were to be cured; the merchants were 
always to have as much as they liked; to be able to 
borrow safely when they pleased, and, when about to 
act unwisely or borrow unwisely, they should- have a 
self-acting machine that should rap their fingers and 
say, “Don’t touch,’’ and that machine was currency. 
As the discussion went on it was seen that the expect¬ 
ed results did not take place; that in spite of the bank¬ 
ing act of 1844 as agonizing crises, as formidable and 
infectious, broke out in the money market as ever 
broke out before. Why was that ? Because the trade 
of England scarcely touched currency. Trade was 
nothing but an exchange of goods. There was cur¬ 


rency only in small things. The attempt to regulate 
discount through the act of 1844 had been an litter and 
complete failure. It had done nothing, and in 1847, in 
1866, the most terrible disasters that ever occurred in 
the way of crises, would give the answer. How did 
they expect to remedy existing evils ? what were their 
means? That after some £15,000,000, notes should be 
paid in gold. There was plenty of gold, but it was 
hard to get it out of the bank where it was locked up. 
People then defended the bank act by saying that at any 
rate it had made the Bank of England safe. To which 
he answered, “Yes;” but the Bank of England note 
was safe enough before. 

He then presented the views of the merchants and 
bankers upon the act. They said, “We want money. 
That horrid act, that terrible restriction! Do you, 
Bank, lend us money and we shall be all straight.” 
He would try to examine this language a little. By 
the act £15,000,000 were issued without any deposit 
of gold. After that no one could take a note out of 
the Bank of England except by leaving£5 downstairs 
in the cellar. How was it before the act of 1844 ? A 
merchant would go to the bank and say that he had 
fine houses and good securities, but he wanted money. 
The bank would say, “Sir, we will take your security, 
we will give paper and you will pay your creditor.’’ 
Why did not that work before 1844? On account of 
the law which people would not understand. How 
many hats were wanted in the nation ? Count the 
heads. Hatters did not make hats on the principle of 
ten apiece. How many ships were wanted between 
England and America ? Count the passengers. How 
many pairs of shoes ? Count the pairs of feet. It 
was just so with the bank notes: more would not cir¬ 
culate than were wanted. And if I want to know how 
much currency a nation wants, be it gold or paper, I 
want to know how much buying and selling is done 
with it; how many of these notes you carry in your 
pocket. If a dealer makes too many spades nobody 
buys them. So if the Bank of England loans you ten 
thousand in notes without the gold your creditor de¬ 
posits them in the bank, and the bank finds itself in 
this position: the notes have come back, and before 
night the bank has paid the whole amount of gold out 
of its own pocket. If the creditor had wanted the 
notes it would have been all right; but he wanted 
money. Therefore I say the bank is absolutely lim¬ 
ited in its power to lend its notes. ‘But,’ it is said, 
‘in crises more notes are clearly needed for the pub¬ 
lic.’ Well, gentlemen, in 1847 and 1866, the two 
greatest crises we have had, the suspension of the 
Banking act was proclaimed by the Chancellor of the 
Exchequer at the urgent request of the traders. But 
there was little call for notes and the law was ab¬ 
solutely nugatory. In 1857 the same result was 
manifested. Why ? Because a crisis does not gener¬ 
ate any use for currency.” 

The inflationists, who have been quoting Prof. Price 
as on their side, are by no means satisfied with his re¬ 
cent utterances. The Philadelphia Pr ss says: 

Professor Bonamy Price in his views on the curren¬ 
cy, as reported in New York, disappoints us greatly, 
and by no means sustains the reputation given him 
by his “Principles of Currency,” published in 1869, 
which certainly indicated great originality, as well as 
capacity to grasp the subject. These recent utter¬ 
ances of his lack breadth and consistency, because no 
great fundamental principle is therein developed and 
applied throughout. He condemns our currency as 
“so vicious, so radically bad,” that he thinks “there 
is only one step to be taken—amputation,” and wor¬ 
ships a currency which is “thoroughly convertible;” 
and yet seems to regard it as a matter of no conse¬ 
quence whatsoever what is the proportion borne be¬ 
tween the currency to be converted and the gold and 
silver which are to convert it. While justifying the 
arbitrary legislation which makes the payment of cir¬ 
culating notes, deposits, bills of exchange, and other 
forms of debt, and the general transaction of business 
and the loans of banks, dependent upon those metals 
possessing qualities which are merely the results of 
this legislation, he regards the usury laws as “not only 
bad, but absurd.” Now, in our view of the subject, 
the necessity for usury laws, only comes from their 
legislative limiting of legal-tender instruments, but 
we contend that having done this the same law makers 
are bound to protect the many against the rapacity of 
the few who control this limited quantity of legal ten¬ 
der. It is quite clear to us, after reading all that Pro¬ 
fessor Price has to urge in favor of a currency con¬ 
vertible into gold, that all that he claims for such con¬ 
vertibility can be had by a currency convertible at the 
pleasure of the holder into 3.65 bonds, reconvertible 
again into legal tenders. This, too, can be accom¬ 
plished, while avoiding those financial tornadoes which 
have become an established institution in Great Britain. 
This interchangeable 3.65 bond is to be the basis of 
our finances in the future, and will give us such real 
“Convertibility” as the world has not hitherto seen, 
and will enable us to dispense with usury laws, bank¬ 
rupt laws, half our almshouses, and a host of other 
contrivances which are the standing evidence of the 
errors of modern law-making. 






FINANCIAL RECORD. 

“WE NEED ONE THINU. BESIDES MORE MONEY, AND THAT IS BETTER MONE Y .’’—Senator Zaeh. Chandler. 


VOL. I. 


FRIDAY, OCTOBER 23, 1874. 


NO. 38. 


The Result of the Elections. 

The October elections seem to be accepted on all 
hands as haying an important bearing on the currency 
qnestion, but opinions are greatly divided as to the 
real meaning of the result. On the one hand the in¬ 
flationists, looking only at the fact that the Democrats 
in Ohio and Indiana nominally stood on the inflation 
side, and gained a victory, maintain that those States 
have pronounced for their own wild cat theories. The 
hard-money party on the other hand, looking at cer¬ 
tain other facts,—notably the attitude on the currency 
question of the most prominent candidates,—contend 
that the verdict is for honest money. 

This is a practical question, and is to be decided by 
two or three simple tests. If the inflationists gained 
a victory in Indiana, over whom did they triuulph ? 
Over the ablest and most plausible apostle of their 
school, Senator Morton. With what leader did they 
triumph? With Gov. Hendricks, a hard-monev man. 
We admit there was very little to choose between the 
platforms of the two parties in Indiana, but the Demo¬ 
crats really repudiated their own doctrines long before 
election. They* greatest success, that which was won 
against the heaviest odds, was the election of “Mr. 
Kerr, a hard-money man, by so large a majority. If 
this was an inflationist triumph, what would a defeat 
be? 

In Ohio, the Democratic State platform was far 
worse than that of the Republicans, but it is notorious 
that the candidates of the party for Congress did not 
all stand upon it. And as in Indiana, so in Ohio, the 
most notable success was that of a hard-money man, 
Mr. Payne, who was elected in the twentieth district by 
a movement that almost became a political revolution. 
In Iowa,certainly no inflationist victory can be claimed. 
The opposition stood on a sound specie payment plat¬ 
form. The Republicans did almost as well. The re¬ 
elected members, five in number, were inflationists at 
the late session, and will perhaps continue to be such; 
but one of the new members and probably all, hold 
quite an opposite opinion from their colleagues on this 
question. As the Nebraska member and all the West 
Virginia representatives are now inflationists, the hard 
money party could lose nothing in those States, and 
they have probably gained. 

Again, although the currency question is undoubt¬ 
edly the most important issue before the people, it was 
not made the most prominent in the canvass. The 
fight was largely made on the old questions; they were 
cliiefly discussed, and voters applied the ancient tests. 
This appears from the fact that in all the States nom¬ 
inations were made with but slight reference to the 
opinions or “records” on the currency issue. In In¬ 
diana two hard-money Democrats at least were nom¬ 
inated, in Ohio inflationist Republicans. Hard-money 
Iowa also renominated inflationist Republicans, as 
Michigan has done. In one district of Ohio, if not 
more, two hard-money men were opponents in the 
canvass. The ultimate test of the result is the pro¬ 
portionate strength of the two parties as indicated by 
the members elected. In the five States which held 
elections last week, forty-six members of the next Con¬ 
gress were elected. The delegations from these States 
gave thirty-three Votes to the vetoed Senate bill, and 
only nine in favor; four inflationists being absent. On 
Judge Hoar’s amendment, to repeal the legal tender 
clause, there were from these States two ayes, and 
thirty-seven nays; six inflationists and one hard-money 
man being absent. Now in the next Congress the 
specie payment party is certain to have four votes 
from Ohio, two from Indiana, and one from Iowa, with 
a probability of three times as many from each of 
these States. The utmost loss therefore is two mem¬ 
bers, the probable gain at least six. It is to be re¬ 
membered that outside of the States which have now 
chosen members of Congress, the Illinois Republicans 
are the only organization of any importance even 
indirectly favoring inflation. We may therefore rea¬ 
sonably look upon what has occurred as the beginning 
and the end of even apparent success for the rag- 
money party. The fact is that the hopes of the in¬ 
flationists died with the close of the last session of Con¬ 
gress ; and though they may delay the resumption of 
specie payments, they can do nothing more or worse. 

It is believed by many that the Indiana Legislature 
will choose as the successor of Mr. Pratt in the Senate, 
Mr. Joseph E. McDonald, the chairman of the Demo¬ 
cratic State Central Committee. Vcorhees and that 


extraordinary idiot, Mr. Isaac Buchanan, the author of 
Judge Orth’s currency plan, are also candidates. Should 
Mr. McDonald be elected the cause of good money 
would make a positive gain in the Senate, for as the 
Chicago Tribune says: “Mr. McDonald has brains, is 
cautious in using them, has sound views, particularly 
on the currency question, is a man of unspotted repu¬ 
tation, and is entitled to the place and honor. It was 
his skilful generalship, and, above all, his Greencastle 
speech, following after Mr. Morton’s comparative 
Terre-Haute failure, that organized the elements of 
discontent into an aggressive and conquering army.” 


Mr. Kerr of Indiana. 

We fear we did some injustice to this gentleman in 
some editorial remarks made in the Record early in 
September, implying that he had recanted some of his 
sound views on the currency. Whatever his language 
at one stage of the campaign may seem to have con¬ 
veyed, we have no reason to doubt, he has been true 
to his well known opinions in favor of honest money. 
He made a speech at the time of his nomination, in 
which he declared himself unequivocally to be in fa¬ 
vor of hard money, and the platform of principles adopt¬ 
ed by the convention that nominated him proclaimed 
the same doctrine. Since his nomination he has spok¬ 
en frequently, and at no time has he accepted the repu¬ 
diation creed laid down by Voorhees and the state con¬ 
vention. He made the closing speech of his canvass 
at New Albany and once more proclaimed the doctrines 
which the Democratic party in convention assembled 
declared to be heretical. He stated with'the utmost 
boldness that he believed in hard money, and in a tariff 
for revenue only, and told his audiencfe that he was ut¬ 
tering his positive convictions, the result of careful, hon¬ 
est and laborious study, and that he was fully persuad¬ 
ed that hard money and commercial freedom were 
calculated to promote the welfare of the whole country, 
and to secure equal and exact justice to all men. 

As Mr. Kerr is elected by a great majority, and is 
to be a prominent candidate for Speaker of the House, 
his opinions are now of more consequence than ever; 
and the fact that he and Mr. Payne of Ohio, both 
sound money men, are the leading Democrats elected 
in those two States, leads us to believe that the infla¬ 
tionists have lost more than they have gained by the 
Western elections. For party purposes, the Republi¬ 
can journals in New York and New Jersey will repre¬ 
sent until after the November election, that the infla¬ 
tionists are gaining in the new Congress, but the fact 
will doubtless be found quite otherwise. The public 
voice has settled the question of further inflation 
though we may still be much too far from resumption 
of specie payments. We give below some utterances 
on the Congressional elections. 


Mr. Pendleton’s Real Sentiments. 

Notwithstanding the various positions which Mr. 
Pendleton as a presidential candidate has felt himself 
called upon to assume—showing a versatility and ver- 
sapellity (or power of turning his coat) equal to that 
of Senator Morton, we have no doubt that his real 
opinions are now what they were thirteen years ago, 
when he denied the power of Congress to issue paper 
money and make it a legal tender. A powerful speech 
of his against the legal-tender act before its passage 
is full of sound sense. It was made in the House, 
January 29, 1862, against the bill to issue one hundred 
millions of treasury notes and make them legal tender. 
We take from the Congressional Globe: 

These notes are to be made lawful money and a le¬ 
gal tender in discharge of all pecuniary obligations, 
either by the Government or by individuals, a charac¬ 
teristic which has never been given to any note of the 
United States by any law ever passed. Not only, sir, 
was such a law never passed, but such a law was nev¬ 
er voted on, never proposed, never introduced, never 
recommended by any department of the Government; 
the measure was never seriously entertained in debate 
in either branch of Congress. . . . 

We are about to launch ourselves, with all sails set, 
upon an ocean of experiment, upon which the wise 
men who administered the Government before we 
came into power, warned by the example of other 
nations, would not permit it even to enter. I believe 

that this Government has reached a crisis in its his- 

» 


tory. I believe it is approaching a period in the his¬ 
tory of its Legislation which may determine the ques¬ 
tion of its continuance. By wisdom it may overcome 
the evils of secession; by its great powers and re¬ 
sources, it may be able to defend itself against those 
in arms; but 1 firmly believe that it can not maintain 
itself against the shock of the accumulated and mani¬ 
fold dangers which follow closely in the wake of an 
illegal, unsound, and depreciated Government paper 
currency. ... 

Mr. Pendleton then commented in the same strain 
on the feature of the bill impairing the obligation of 
private contracts, and continued: 

Where, sir, does Congress get this power ? Where 
is the grant to be found ? One would suppose that a 
power like that—a power which involves the impair¬ 
ing of the obligations of such a vast class of con¬ 
tracts ; which proposes to disturb vested rights to such 
an immense extent—would be worthy of a place in 
the express grants of the Constitution. . . . 

When I come to examine the powers of Congress, 
according to the principles of interpretation to which 
I have said I adhere, I look to the grants of the Con 
stitution. I find no grant of this power in direct 
terms, or, as I think, by fair implication. It is not an 
accidental omission; it is not an omission through in- 
ad vertancy; it was intentionally left out of the Con¬ 
stitution because it was designed that the power should 
not reside in the Federal Government, 

Air. Pendleton had previously cited the fact that al¬ 
though the Articles of Confederation gave to Con- 
gress*the power to raise armies, to provide a navy, to 
borrow money, and to emit bills of credit upon the 
faith of the United States, yet the statesmen of that 
day never, even in all the distress and pressure of the 
Revolution, supposed that they possessed any such 
power as this. He next proceeded to cite from the 
Madison Papers the debates on the Constitution, to 
show that the Convention meant not only to withhold 
from Congress anything that could be construed as the 
power to make notes a legal tender, but to give it noth¬ 
ing that could be construed as a grant of power to is¬ 
sue government notes at all as money. He quotes a 
note of Mr. Madison’s appended to his report to this 
debate, as follows: 

This vote in the affirmative (for striking out) by Vir¬ 
ginia was occasioned by the acquiescence of Mr. Mad¬ 
ison, who became satisfied that striking out the words 
would not disable the Government from the use of pub¬ 
lic notes, as far as they could be safe and proper, and 
would only cut off the pretext for a paper currency, 
and particularly for making the bills a tender either 
for public or private debts. 

Having thus quoted Madison, Mr. Pendleton pro¬ 
ceeded to quote Hamilton against the power of the 
Government to issue paper money, prefacing his cita¬ 
tion with this remark: 

Mr. Hamilton, certainly a gentleman who was in 
favor of enlarging to the utmost the powers of the gov¬ 
ernment, in his very first report on this subject to Con¬ 
gress upon the subject of a national bank, makes a dis¬ 
tinction between the emission of bills by the govern¬ 
ment, and the creation of a bank with power to emit 
its own bills. In that famous report on a national 
bank in 1790, he uses this language; The emitting of 
paper money by the authority of the government, is 
wisely prohibited to the individual States by the Na¬ 
tional Constitution, and the spirit of that prohibition 
ought not to be disregarded by the Government of the 

United States.The wisdom of the government 

will be shown by never trusting itself with so seducing 

and dangerous an expedient.There is almost a 

moral certainty of it becoming mischievous. The 
stamping of paper is an operation so much easier than 
the laying of taxes that a government in the practice 
of paper emissions would rarely fail in any such emer¬ 
gency to indulge itself too far in the employment of 
that resource to avoid, as much as possible, one less 
auspicious to its present popularity.” 

Mr. Pendleton then cited speeches of Webster and 
Calhoun against the power of Congress to make any¬ 
thing but gold and silver a legal tender, and concluded 
his argument on the constitutionality of the bill with 
this: 

Sir, it seems to me that if the language of the Con¬ 
stitution aud the weight of authority can settle any 


























131 


THE FINANCIAL RECORD. 


proposition, it is that Congress has not the power to (lo | 
that which it is proposed shall be done by the provis- ! 
ions of this bill. 

He denied that the bill would be Constitutional, even 
if the notes were equal to coin, and if, therefore, there 
was no violation of the obligation of contracts, and 
said: — 

Now, sir, the argument which I have made in refer¬ 
ence to the constitutional power of Congress, does not 
depend in any degree upon the question whether or 
not these notes can maintain their par value in gold 
and silver. But it may give point to the argument to 
show the effect which will be produced by the provis¬ 
ions of the bill itself in that respect. But, Mr. Chair¬ 
man, I go a step further. I doubt whether there is any 
power in the Federal Government to issue the notes 
described in this bill, whether they are made a legal 
tender or not. I have shown to you that the power to 
enact bills of credit was expressly withheld by the Con¬ 
vention which framed the Constitution. I have shown 
that it was withheld because they did not intend that 
this power should be vested in Congress. 

He cited Marshall, Webster, and Story, to support 
this denial, and then he proceeded to describe the base 
character of the proposed notes, in their irredeema¬ 
bility, and to foretell the consequences of their infla¬ 
tion of the currency. 

The wit of man has never discovered a means by 
which paper currency can be kept at par value, except 
by its speedy, cheap, certain convertibility into gold 
and silver. I need not cite gentlemen to history or to 
authorities—writers on political economy—to prove it. 
Unless convertible, they have always depreciated; 
they always will depreciate; they ought to depreciate, 
because they are only valuable as the representatives 
of gold and silver; and if they are not convertible into 
that of which they are the representative, they must 
necessarily lose their value. You send these notes out 
into the world stamped with irredeemability. You put 
on them the mark of Cain, and, like Cain, they will go 
forth to be vagabonds and fugitives on the earth. 

What then will be the consequence ? It requires no 
prophet to tell what will be their history. The cur¬ 
rency will be expanded; prices will be inflated; fixed 
values will depreciate; incomes will be diminished; 
the savings of the poor will vanish; the hoardings of 
the widow wiil melt away; bonds, mortgages, and 
notes, everything of fixed value, will lose their value; 
everything of changeable value will be appreciated; 
the necessaries of life will rise in value; the government 
will pay tvo-fold—certainly largely more than it ought 
—for everything that it goes into the market to buy; 
gold and silver will be driven out of the country. 
What then ? The day of reckoning must come. Con¬ 
traction will follow. Private ruin and public bank¬ 
ruptcy, either with or without repudiation, (sic) will 
inevitably follow. 


Spirit of the Press. 

[Kalamazoo (Mich.) Telegraph.] 

The Essex District of Massachusetts has renominat¬ 
ed the statesman who has done more to disgrace it and 
the whole country, than any other twenty men could 
have done. There has been some hope, for awhile, 
that Butler would be defeated in the convention by a 
better man, but the Republicans of the District have 
saddled themselves with the man again, and we must 
look forward to witnessing his operations in the Forty- 
fourth Congress. The only thing the people outside of 
the Essex District can do, is to hope for the coming of 
the millennium, when it is more than likely that But¬ 
ler will not hold oftieial position. 

[Cincinnati Enquirer.] 

There is less currency in the United States in pro¬ 
portion to the population than in any other commer¬ 
cial country in the world. The Government and its 
Republican supporters say there is enough for the 
wants of the people. 

[Cincinnati Gazette.] 

What evidence is there that there is not currency 
enough in the country? None whatever. The cur¬ 
rency of England and France is based on gold, and is 
convertible on demand. Ours is based on credit, and 
is not convertible at all. If it were made convertible 
into coin, the volume would diminish largely and that 
would show exactly how much currency the country 
needs. With the increase of a fictitious or inconverti¬ 
ble currency, fictitious wants increase in much greater 
proportion, and the latter can never be supplied by the 
former. Start on a specie basis, and the volume of 
paper money will be as large as the wants of the coun¬ 
try require, whether it be 500 or 1000 millions. The 
laws of trade would then regulate it. It cannot be reg¬ 
ulated by the arbitrary issues of inconvertible paper 
money. Every sensible man who is doing business on 
a sound basis knows there is currency enough, and 
knows, furthermore, that whatever trouble exists, is 
traceable, not to a scarcity of currency, but to the dis¬ 
eases resulting from previous inflation. 


. The Congressional Elections. 

. r. WHAT THE INFLATIONISTS SAY. 

[From the Inter-Oeean.J 

With the same general causes operative in politics, 
why the two. States lying east of Illinois should declare 
so overwhelmingly in favor of the Democratic party, 
while the two States and one Territory lying west of 
Illinois should declare quite as overwhelmingly in 
favor of the Republican party, is one of those problems 
not susceptible of absolute demonstration. A consid¬ 
eration of the following facts, however, may aid in the 
solution: Ohio and Indiana are States of mixed indus¬ 
tries. Since the panic their manufacturing interests, 
which had grown to prosperous and promising propor- 
tiohs, were especially crippled, and the stagnation 
which ensued bore severely on capital and labor alike. 
Property-owners with rapidly diminishing revenues, 
and compulsorily idle laborers—skilled and unskilled 
—with families pleading piteously for clothing, shel¬ 
ter, and food, are not always the calmest critics of po¬ 
litical causes and effects; and as it was easy for the 
national party so long in minority to charge the blame 
for this industrial and commercial stagnation upon the 
dominant party, and not so easy for the latter to jus¬ 
tify and defend, is it any wonder that the declarations 
of the Democracy in their State platforms in favor of 
larger issues of Treasury notes and a termination of 
the restrictions on national bank notes appealed to 
popular sympathy and won votes ? On the contrary, 
the two States and one Territory west of Illinois whicli 
showed such increased devotion to Republicanism are 
essentially grain-growing regions. During the past 
year the market prices for all kinds of cereals have 
been exceptionally high for times of peace, and the 
return to the farmer for his expenditure of capital and 
labor has been quick and generous. The masses of 
the people have been content, and as the Republican 
declarations of financial policy are in favor of an en¬ 
largement rather than an abridgement of monetary 
supply, the popular sympathy and the popular confi¬ 
dence rested where it had abided with such undevia¬ 
ting faith for so many years. 

With such significant practical examples of politi¬ 
cal results on either hand, Illinois Republicans have 
especial reason for congratulation that their formal 
promulgation of party faith on questions of finance is 
demonstrated to lie in such accord with the popular 
judgment, and that the great body of their political 
enemies in this State saw fit, in the enunciation of 
their partisan belief, to be given over to their hard- 
money delusions. 

[Philadelphia Pres3.] 

If the voice of Ohio and Indiana has any signifi¬ 
cance, it is that the country must have currency suffi¬ 
cient for its business. If it is a protest against any¬ 
thing, it is against the “hard-money and free trade” 
platform upon which the Democratic party in the East 
has planted itself. The Republicans lost only through 
their timidity, and because they failed to echo the 
popular demand. But how stands the case in Penn¬ 
sylvania ? Mr. John Miller, chairman of the Demo¬ 
cratic State Committee, in his address, shouting him¬ 
self hoarse ower the Ohio and Indiana victories, states 
it himself. Here is what he says: “Rise up and gird 
yourselves for the contest on the 3d of November, and 
join in the great victory for constitutional government. 
Gold and Silver money.” “Gold and silver money,” 
and idle workmen and closed workshops. Contrac¬ 
tion of the currency and of the poor man’s wages. 
“Hard money” and hard times. Ohio and Indiana 
voted against these things, and gave Democratic ma¬ 
jorities. Pennsylvania will vote against them and 
give a Republican majority. < 

[Cincinnati Enquirer.] 

The result means opposition to the national bank 
monopoly. It means that the volume of the currency should 
be enlaryed in accordance with the business interests of 
the country. It means that greenbacks should be 
gradually substituted for the national bank currency. 
The fact that Mr. Payne was elected in the Cleveland 
District does not militate against the position which 
we have assumed. He was elected because his oppo¬ 
nent was a knave and an admitted Congressional cor¬ 
ruptionist, and on a district platform not inharmonious 
with that of the State on the currency question. 

[Atlanta (Ga.) News.] 

Ohio has voted in favoi; of an increase in the circu¬ 
lating medium, and in opposition to the Eastern clamor 
for an immediate resumption of specie payment. 
In this she will find the South almost solidly with her. 
If gold was at one hundred and forty to-day, and cot¬ 
ton at twenty" cents per pound, our planters and our 
entire people would be more prosperous than they are 
now with gold at one hundred and nine, and cotton at 
thirteen cents. Doubtless theorists will prove on pa¬ 
per to the contrary, but the men of the West and of 
the South cannot be convinced. Specie payments 
will be resumed in good time, but at present the com¬ 
mercial, agricultural and manufacturing interests of 
the country demand an expansion of the currency, so 
that life and activity may be given to trade and the 
resources of the country developed. 


II. WHAT THE SOUND MONEY MEN SAY. 

[Cincinnati Gazette.] 

Sayler declares lie is for moderate inflation and spe¬ 
cie payment. Banning is all things to all men. To 
the inflationists lie is for inflation. To the specie man 
he is against inflation. Banning never knows what 
party he belongs to till after the nominations are made, 
and he will not know just how he stands on inflation 
till the votes are counted. These are the Congressmen 
to represent the solid business city of Cincinnati. 

[Chicago Times.] 

In the elections already held, the repudiationists 
have gained thirteen or fourteen members. They 
have gained six in Ohio, probably six in North Caro¬ 
lina, and one or two in Indiana. All these are to be 
reckoned as additions to the present congressional rpa- 
jority opposed to the administration policy of resump¬ 
tion, and in favor of the opposite policy of inflation 
and repudiation. These gains ail have the same mean¬ 
ing, and that meaning is, increase of the volume of irre¬ 
deemable rag-currency; conversion of the federal treasury in¬ 
to a gigantic and permanent rag-money null, subject to the con¬ 
trol of political demagogues and party emergencies; peri¬ 
odical in flation as the excess of shin-plasters becomes absorbed 
by a fictitious advance of prices; and, finally, a grand break¬ 
down, repudiation, and hopeless rum. This is the pro¬ 
gramme which the increase, by the recent elections, of 
the repudiationist opposition in Congress means. 

[Rochester (N. Y.) Democrat.] 

It was painfully evident during the debates of the 
last session of Congress, and by the tone of too many 
of the Western papers, that an expansion of the 
currency had ardent supporters among the Republi¬ 
cans of the West. Some of the most prominent Re¬ 
publican champions of inflation, upon the floors of 
Congress, have either abandoned thffir untenable po¬ 
sitions, or have maintained a prudent silence upon the 
subject; and we are not aware of any such who have 
forsaken the party because of its refusal to co-oper¬ 
ate in their schemes. They did, however, much to 
debauch the public mind of the West, while they were 
in the fervor of their advocacy of financial heresies. 
Political leaders, like military generals, may be able 
to make good their own retreat from perilous circum¬ 
stances, without being able either to convince or to 
coerce all their followers into a like movement. The 
evil effect of certain congressional utterances of Re¬ 
publican senators and representatives will not pass 
away in a day. They had their influence in Ohio, in 
seducing to the Democratic standard, many otherwise 
earnest Republicans, who were caught by the specious 
cry of an abundant prosperity as the result of a flood 
of paper money. 

[N. Y. Evening Post.] 

While nearly every state platform adopted this au¬ 
tumn east of the Alleghanies has pronounced strongly 
in favor of a speedy return to specie payments, the 
fact seems to be overlooked in some cases that Con¬ 
gress is the body on which we must depend to put into 
practical shape the reform thus advocated. Conse¬ 
quently, even in states where the sentiment in favor of 
a sound currency is most pronounced, we find members 
of Congress who threw all their influence last winter 
with the inflationists, securing renominations either 
through a mistaken deference to their assumed person¬ 
al claims or through a skillful manipulation of the cau¬ 
cus. No state in the Union is more unanimous and 
outspoken in the advocacy of a speedy return to specie 
payments, and in opposition to every form of inflation, 
than our own. Our Legislature last winter, without a 
dissenting voice, placed on record its protest against 
more paper money. The platforms of both parties in 
this state chose the strongest words to express the 
same sentiment. Yet a number of our present repre¬ 
sentatives in Congress have misrepresented their con¬ 
stituents, opposed every proposition looking towards 
specie payments, and either by their votes or their si¬ 
lence helped to increase the majority of the inflation¬ 
ists. A few of them, like Mr. Wood, were advocates 
of a sound currency, and oniy opposed some specific 
method proposed for attaining it. It is easy, however, 
to select those who are deservedly to be classed among 
paper-money inflationists; and not one of these should 
be permitted to misrepresent the State for another 
term. Duell and Lamport and Merriam have been set 
aside for other candidates. Hathorn, Platt and Ses¬ 
sions, however,—whose records are among the worst— 
have secured renominations, and deserve defeat. If, 
during the present generation, any steps are to be taken 
towards a return to specie payments and a provis¬ 
ion against the possibility of any further issues of pa¬ 
per money by the government, those steps will be tak¬ 
en by the Congress this autumn elected. Every man, 
therefore, who this autumn votes for an inflationist 
for member of Congress endangers the prosperity of 
his country. 

[Newark (N,.J.) Advertiser.] 

The vote of the States of Ohio and Indiana was a 
vote in favor of the issue of-more irredeemable curren¬ 
cy by the government, and the substitution of a print¬ 
ing machine in Washington for the safe and sound 
currency we now have from the national banks. It is 
a repudiation of specie payments, a declaration that 
even our bonds, upon the good faith of which, pledged 
as they are to be paid in gold, our national credit rests, 
shall be paid in irredeemable promises to pay. 













THE FINANCIAL RECORD. 


132 


American and English Currency. | 

Debate at the Boston Sociae Science Meeting. 

Ihe American Social Science Association, at its 
annual meeting last week in Boston, listened to an in¬ 
teresting debate on Currency, in which Prof. Price, 
an English political economist, gave his view of the 
famous Bank Act of Sir Robert Peel. Our readers 
will peruse his remarks with interest, but we must add 
a word of caution. He says that the Bank Act of ’44 
made the currency safe when it was safe before. But 
he omits to say that it made the currency converti¬ 
ble under all circumstances, which it was not before, 
and which is quite a different thing. Mr. Price farther 
says that undue fuss is made about the currency, be¬ 
cause it enters in so small a percentage into the trans¬ 
actions of business. But in fact all the remaining ma¬ 
terial in such transactions is directly dependent upon 
the currency, is indeed of exactly the same nature, 
that is, what the banks call deposits. The whole ques¬ 
tion, therefore, is one of currency. Finally we regret 
to see that Mr. Price maintains one of the most dan¬ 
gerous postulates of the inflationists, that no more 
currency can be issued than the wants of. trade re¬ 
quire. The number of hats required is determined by 
the number of heads, because one head can only wear 
one hat. But an article which requires the use of only 
five dollars for its purchase may, by a simple rise of 
price, absorb ten dollars. Additions to the currency 
can no more be distinguished from the original than 
additions of water in a pail. 

REMARKS OF MESSRS WALKER AND BRADFORD. 

Hon. Amasa Walker in opening the debate, spoke 
of the panic of a year ago, which occurred because 
there was a disease in the currency; a false standard 
of value; because the laws of wealth had been vio¬ 
lated. The evils of our currency had been made ap¬ 
parent, but what occasioned them ? It was the act 
of Congress that destroyed the standard of value; 
that made the paper of the United States the stand¬ 
ard of value instea l of gold and silver. The conse¬ 
quence was that money was multiplied in quantity. 
We had about §70,000,000 of paper circulation when 
the act was passed, but we went on till we had in a 
very short time §700,000,000. At the same time banks 
were chartered with the very wise purpose of compet¬ 
ing with the government in issuing paper money. A 
more ridiculous measure was perhaps never passed. 
Gold went up at one time to 185 per cent, premium. 
The consequence was that the government had to pay 
double and treble for everything it warited to carry 
on the war, and he would declare, because it was a 
matter capable of proof, that of the debt of the Gov¬ 
ernment at the end of the war .§1,500,000,000 were 
simply inflation. The remedy would seem to be very 
clear at once. If the standard had been destroyed, 
restore it: if there was an excessive volume of cur¬ 
rency—§700,000,000 where there had been but §70,- 
000,000 when we were in a high state of prosperity, 
the matter to be accomplished was to destroy this ex¬ 
cessive currency. That was the one remedy, but it 
should be applied gradually. His plan for effecting 
this was to issue §10,000,000 a month in six per cent, 
compound interest notes, and destroy §10,000,000 of 
greenbacks. Then in three years and a half the green¬ 
backs would be destroyed and these notes would form 
the circulation. These notes should be convertible at 
the end of two years into five per cent, ten-forty 
bonds. Every person who received them would lay 
them by. That would be the surplus money of the 
country which would thus be hoarded, and at the end 
of two years they would be converted into bonds. 
That would require two years and a half, and it 
would be two years after the last was issued before 
they were refunded. And so it was a process of five 
years and a half, but just so soon as the process be¬ 
gan, just so quickly wouid the country be on the road 
to resumption. 

Mr. G. Bradford thought the Congress of the United 
States was under the management of the national 
banks, and in their interest. The question was not 
simply by what process we should return to specie 
payments, but to find some power that should battle 
against national banks. And that power could be 
found only in the Secretary of the Treasury. He should 
have more power and a good deal more responsibility. 
But setting aside the question of administration, it 
should be considered on what principles we wex - e to 
start to discover and remedy the evils that existed. A 
very natural process would be to investigate the lessons 
of history to know what had been done by others. 
Now it was well established that no nation had ever 
yet resorted to inconvertible currency without in the 
end repudiating it in part. The question was whether 
we should follow that road or should make an ex¬ 
ception in history. Of our ability there was no ques¬ 
tion. When our five per cent, bonds were selling at 
par and our six per cent, bonds at a premium, it was 
not a question of ability, but of willingness. In clos¬ 
ing, he spoke of the financial system of England, and 
called the attention of the audience to Professor Bona- 
my Price of Oxford University, who was present, and 


| who would tell the association something about the 
Bank Act of 1844. 

REMARKS OF PROF. PRICE. 

Prof. Price said he had been asked to speak on the 
Bank Act, a much disputed statute. What it was is 
still unknown even to the people of England, as un¬ 
known as if buried in the very foundations of the earth. 
It must be judged from three distinct and different 
points of view—the ideas of the men who called it into 
existence, the ideas of the banking and commercial 
world respecting it, and what he submitted to be the 
true interpretation of it. Jg came in 1844. Sir Robert 
Peel and other great authorities were its advisers. 
1 hey had three distinct ends in view—to guard against 
the dangers of country bankers as issuers of notes, to 
act upon speculation in trade, and to control the rate 
of interest and all the great agitations in the money 
market. First, in reference to the country bankers 
Prior to 1844 the issuing of notes was absolutely free 
in England, and every Englishman who liked and who 
could persuade his neighbors to take his notes was free 
1 to issue them. In some towns the notes were confined 
to the localities where the bankers were known; in 
other cases the bankers enjoyed great celebrity, and 
were well known over different parts of England. 

These country banks, said Prof. Price, came into 
competition with the Bank of England, and one ob¬ 
ject of Sir Robert Peel was to limit the circulation 
and substitute for it that of the bank of England whose 
notes were always safe. This had been done, and 
though there is still a great deal of country paper cir¬ 
culating there could be no new issues after 1844, and 
if any bank stopped issuing, its circulation ceased. 
No new private banker could come into action, and 
therefore there was a cause at work which would in 
time have extinguished the country circulation. A 
great instance took place the other day in the case of 
the National Provincial Bank of England, which had 
a very enormous country circulation, from which was 
derived considerable profit. Englishmen were old- 
fashioned people, and moved along bit by bit, in azig- 
zagging, jigjog way, and they hall not yet got rid 
of an old remnant of a law which forbade any banker 
who circulated notes in the country to bank in London. 
It was a remnant of the wisdom of old times. The 
National Provincial Bank of England found that the 
profits of banking in London would far exceed the 
profits they could derive from the issue of notes, and 
so, like sensible men of business, they chose of two 
profits the larger, gave up issuing notes, and became 
bankers in London, and a great lot of country notes 
were thrown down the abyss. W ts it wise to put the 
country bankers down? He affirmed yes. And why? 
Because the issuing of banking notes was essentially a 
public function and not a matter of private trade. It 
was the duty of every government to protect the peo¬ 
ple when they were unable to protect themselves, and 
lie could see that a suppression of the country currency 
was demand<*l. Why was there this necessity? We 
conceived the idea that emigrant passengers could not 
take care of themselves, and so we made laws inter¬ 
fering with tiie passenger trade; we conceived that if 
men bought guns and took* the chance of the seller 
giving them something that could be depended upon, a 
good many people would be losing their heads, and 
vve thought it was well for the Government to try the 
barrels. So when we found that every banker who 
went into bankruptcy, as the result of unlucky specu¬ 
lation, vitally injured many people who had confided 
in him, we thought that the public should be offered 
protection. 

He now approached his second subject. Around 
this were lots of mist, plenty of cloud, many cross 
ideas. The advisers of Sir Robert Reel thought they 
were going, by this banking act of 1844 to make men 
sensible, to prevent merchants from making unlucky 
speculations, from sending cargoes where they ought 
not to; in short, that they had found the great cure 
for the evils of humanity by acting upon the currency. 
Really it was something marvelous, these great men, 
bankers who had only to look into their own books to 
see how their customers paid their bills. How did he 
pay his bills ? He had his tailor’s bills to pay, his 
butcher’s bills, gardener’s bills and all sorts of bills, 
and did he touch currency ? He touched currency for 
small change. The gigantic trade of England was 
worked by a different machine; it was worked by 
checks. He paid his bills in pieces of paper and re¬ 
ceived his income in pieces of paper. What had he 
got to do with currency, the bank note and sovereign ? 
Those wise men seemed to think that the evils of 
speculation were to be cured; the merchants were 
always to have as much as they liked; to be able to 
borrow safely when they pleased, and, when about to 
act unwisely or borrow unwisely, they should have a 
self-acting machine that should rap their fingers and 
say, “Don’t touch,” and that machine was currency. 
As the discussion went on it was seen that the expect¬ 
ed results did not take place; that in spite of the bank¬ 
ing act of 1844 as agonizing crises, as formidable and 
infectious, broke out in the money market as ever 
broke out before. Why was that ? Because the trade 
of England scarcely touched currency. Trade was 
nothing but an exchange of goods. There was cur¬ 


rency only in small things. The attempt to regulate 
discount through the act of 1844 had been an utter and 
complete failure. It had done nothing, and in 1847, in 
1866, the most terrible disasters that ever occurred in 
the way of crises, would give the answer. How did 
they expect to remedy existing evils ? what were their 
means? That after some £15,000,000, notes should be 
paid in gold. There was plenty of gold, but it was 
hard to get it out of the bank where it was locked up. 
People then defended the bank act by saying that at any 
rate it had made the Bank of England safe. To which 
he answered, “Yes;” but the Bank of England note 
was safe enough before. 

He then presented the views of the merchants and 
bankers upon the act. They said, “We want money. 
That horrid act, that terrible restriction! Do you, 
Bank, lend us money and we shall be all straight.” 
He would try to examine this language a little. By 
the act £15,000,000 were issued without any deposit 
of gold. After that no one could take a note out of 
the Bank of England except by leaving £5 down stairs 
in the cellar. How was it before the act of 1844 ? A 
merchant would go to the bank and say that he had 
fine houses and good securities, but he wanted money. 
The bank would say, “Sir, we will take your security, 
we will give paper and you will pay your creditor.” 
Why did not that work before 1844? On account of 
the law which people would not understand. How 
many hats were wanted in the nation ? Count the 
heads. Hatters did not make hats on the principle of 
ten apiece. How many ships were wanted between 
England and America ? Count the passengers. How 
many pairs of shoes ? Count the pairs of feet. It 
was just so with the bank notes: more would not cir¬ 
culate than were wanted. And if I want to know how 
much currency a nation wants, be it gold or paper, I 
want to know how much buying and selling is done 
with it; how many of these notes you carry in your 
pocket. If a dealer makes too many spades nobody 
buys them. So if the Bank of England loans you ten 
thousand in notes without the gold your creditor de¬ 
posits them in the bank, and the bank finds itself in 
this position: the notes have come back, and before 
night the bank has paid the whole amount of gold out 
of its own pocket. If the creditor had wanted the 
notes it would have been all right; but he wanted 
money. Therefore I say the bank is absolutely lim¬ 
ited in its power to lend its notes. ‘But,’ it is said, 
‘in crises more notes are clearly needed for the pub¬ 
lic.’ Well, gentlemen, in 1847 and 1866, the two 
greatest crises we have had, the suspension of the 
Banking act was proclaimed by the Chancellor of the 
Exchequer at the urgent request of the traders. But 
there was little call for notes and the law was ab¬ 
solutely nifgatory. In 1857 the same result was 
manifested. Why ? Because a crisis does not gener¬ 
ate any use for currency.” 

The inflationists, who have been quoting Prof. Price 
as on their side, are by no means satisfied with his re¬ 
cent utterances. The Philadelphia Press says: 

Professor Bonamy Price in his views on the curren¬ 
cy, as reported in New York, disappoints us greatly, 
and by no means sustains the reputation given him 
by his “Principles of Currency,” published in 1869, 
which certainly indicated great originality, as well as 
capacity to grasp the subject. These recent utter¬ 
ances of his lack breadth and consistency, because no 
great fundamental principle is therein developed and 
applied throughout. He condemns our currency as 
“so vicious, so radically bad,” that he thinks “there 
is only one step to be taken—amputation,” and wor¬ 
ships a currency which is “thoroughly convertible;” 
and yet seems to regard it as a matter of no conse¬ 
quence whatsoever what is the proportion borne be¬ 
tween the currency to be converted and the gold and 
silver which are to convert it. While justifying the 
arbitrary legislation which makes the payment of cir¬ 
culating notes, deposits, bills of exchange, and other 
forms of debt, and the general transaction of business 
and the loans of banks, dependent upon those metals 
possessing qualities which are merely the results of 
this legislation, he regards the usury laws as “not only 
bad, but absurd.” Now, in our view of the subject, 
the necessity for usury laws, only comes from their 
legislative limiting of legal-tender instruments, but 
we contend that having done this the same law makers 
are bound to protect the many against the rapacity of 
the few who control this limited quantity of legal ten¬ 
der. It is quite clear to us, after reading all that Pro¬ 
fessor Price has to urge in favor of a currency con¬ 
vertible into gold, that all that he claims for such con¬ 
vertibility can be had by a currency convertible at the 
pleasure of the holder into 3.65 bonds, reconvertible 
again into legal tenders. This, too, can be accom¬ 
plished, while avoiding those financial tornadoes which 
have become an established institution in Great Britain. 
This interchangeable 3.65 bond is to be the basis of 
our finances in the future, and will- give us such real 
“convertibility” as the world has not hitherto seen, 
and will enable us to dispense with usury laws, bank¬ 
rupt laws, half our almshouses, and a host of other 
contrivances which are the standing evidence of the 
errors of modern law-making. 

















THE AMERICAN SOCIAL SCIENCE ASSOCIATION. 


This Association will continue its active work during the year 1875, according to the general plan an¬ 
nounced from time to time during the past year. So far as this plan relates to the establishment of local 
bodies, co-operating with the present Association, it may be gathered from the following votes of the Execu¬ 
tive Committee, passed in April, 1874: 

1. That it does not seem practicable to bring all organizations for the promotion of Social Science, existing 
or to be established, to the same precise form and model; but that such as are willing to become auxiliary to 
this Association shall be designated as of three main classes, namely: (1) Branch Associations, similar to that 
at Philadelphia, (2) Local Departments, and (3) Corresponding Committees. 

2. That in the Branch Associations, membership fees and assessments may be regulated according to the 

circumstances of the locality where such Association is formed; but tljat none shall be considered a Branch of 
the American Association until it shall have paid into our Treasury either the round sum of $300, or the an¬ 
nual sum of $15, or, in lieu of both, the value of $15 a year in publications. In consideration of such pay¬ 
ment, the President, Secretary and Treasurer, or any three members of the Branch Association, whom it may 
designate, shall be admitted as Members of the American Association, and the President shall be, ex-officio, a 
Vice-President of the American Association. * 

3. That Local Departments, now existing or to be established hereafter, may adopt special fees and condi¬ 
tions for membership, as the members thereof may choose; but each Department shall pay into the Treasury 
of the American Association not less than $5 annually, in consideration of which its Chairman shall be a mem¬ 
ber of this Association, and, ex-officio, one of its Directors; and every such Department shall report its doings 
to the parent Association as often as once in three months, and once a month if required. 

4. That the Committees of Correspondence may be excused from all assessments, and may have the op¬ 
portunity of obtaining our publications at cost price, or by way of exchange for their own publications, and 
that the same privilege in respect to publications shall be extended to all members of Branch Associations and 
Local Departments. 

This plan has not been finally passed upon by the Association, and is subject to modification in its details; 
the question of accepting it being now in the hands of a Committee which will report at an adjournment of the 
Annual Meeting of October 14, to be held in Boston, Wednesday, January 13, 1875, to which all members of 
the Association are hereby invited. The following are the officers for 1875, elected at the October meeting, 
but to hold office until the Annual Meeting in January, 1876: 


President. 

Theodore D. Woolsey, New Haven , Conn. 

Vice-Presidents. 

Samuel Eliot, Boston. 

David A. Wells, Norwich, Conn. 

F. L. Olmsted, New York. 

H. C. Lea, Philadelphia. 

Rev. Dr. James McCosh, Princeton, N. J. 

J. W. Hoyt, Madison, Wis. 

Charles I. Walker, Detroit, Mich. 

William G. Hammond, Iowa City. 

George Davidson, San Francisco. 

D. C. Gilman, Oakland, Cal. 

W. T. Harris, St. Louis. 

Secretary. 

F. 3, Sanborn, Concord, Mass. 

Treasurer. 

Gamaliel Bradford, Boston, (5 Pemberton Sq.) 

Directors. 

Emory Washburn, Cambridge. 

Charles W. Eliot, “ 

Prof. Benj. Peirce, “ 

S. G. Howe, Boston. 

T. C. Amory, “ 

C. C. Perkins, “ 


J. M. Barnard, Boston. 

R. M. Mason, “ 

J. S. Blatchford, Boston. 

E. E. Hale, 

George T. Angell, “ 

J. M. Forbes, “ 

E. W. Hooper, “ 

Mrs. John E. Lodge, “ 

Mrs. S. Parkman, “ 

Mrs. C. H. Dall, “ 

Mrs. Henry Whitman, Boston. 

Miss A. W. May, “ 

Rev. E. C. Guild, Waltham. 

Rev. Dr. E. C. Wines, New York. 

H. Villard, New York. 

Nathan Allen, Lowell. 

Arthur L. Perry, Williamstown. 

Miss Louisa Lee Schuyler, New York. 
Dorman B. Eaton, New York. 

E. Lloyd Howard, Baltimore. 

IIi^nry B. Baker, Lansing, Mich. 

Z. 11. Brockway, Detroit, Mich. 

Mrs. W. P. Lynde, Milwaukee. 

Thomas M. Logan, M. D., Sacramento, Cal. 
D. W. Wilder, Topeka, Kan. 


The Chairmen and Secretaries of the Five Departments are to be added to the above list, if not already in¬ 
cluded. They are: 

I. Department of Education, C. W. Eliot, Chairman; -, Secretary. 

II. Department of Health, Dr. Edward Wiggles worth, Boston, Chairman; Dr. D. F. Lincoln, Secretary. 

III. Department of Jurisprudence, Hon. John Wells, Boston, Chairman ; James B. Thayer, Cambridge, Sec’y. 

IV. Department of Trade and Fmance, David A. Wells, Chairman; Prof. W. G. Sumner, New Haven, Sec’y 
V. Department of Social Economy, Prof. W B. Rogers, Boston, Chairman ; F. B. Sanborn, Secretary. 

1 he monthly meetings of the above officers are held at the office of the Association, which is also the office 
of the Secretary and Treasurer, 5 Pemberton Square, Boston. The next General Meeting of the Association 
will be held in Detroit, in May or June, 1875. The fee for membership is $5, and all are invited to become 
members, who feel an interest in our work. 


The aim of the Association is to organize and concentrate forces now working at random. A marked feature 
of the time is the desire to investigate and ameliorate the conditions^ human life. But this impulse, too often 
fitful and ill directed, is apt to defeat itself. Thus all competent authorities agree that the overflowing and 
unregulated spirit of charity is one of the most hurtful and dangerous of our social tendencies. The British 
Association, in successful operation since 1857, aims to propose suggestions of reform for the attention of the 
Ministry. Such an agency appears to be much more necessary in this country, not only from the inefficiency 
and unsteadiness of executive government, but from the want of connection between the States. Upon the 
great subjects of finance, Taxation, Education, Jurisprudence, Health, Charities, Pauperism, Prisons, Rail¬ 
ways, Insurance, Police, &c., &c., not to speak of the lack of system in individual States, there are or may be 
thirty-seven different systems, unconnected and without reference or advantage to each other. To bring into 
closer relations men of special talents and acquirements in different States, and, while excluding frivolities and 
crotchets, to estaolish general principles as against empiricism in the conduct of society, is the purpose for 
which we ask the sympathy, not only of the friends of humanity, but of every lover of his country. 

Boston, Oct. 22, 1874. 







FINANCIAL RECORD. 

“WE NEED ONE THING BESIDES MORE MONET, AND THAT IS £ OTTER MONET .”-Senator Zash. Chandler. 


m. i. 


FRIDAY, OCTOBER 30, 1874. 


NO. 39. 


Farewell Till We Come Again. 

ith this number of the Record its publication will 
cease for the present, to be resumed whenever the 
exigencies of the public credit, or the sway of popular 
delusion shall make the occasion of other issues of its 
diminutive sheet. The emergency which first called 
it forth has passed away; the great fight against infla¬ 
tion has been fought and won, and Congress and the 
people may now be safely left to grope their way 
slowly, and with many a stumble, towards the true 
doctrine of a paper currency, based upon gold, and 
readily convertible thereinto. We shall not expect 
the present Congress to do much in that * direction; 
but the new one will not be controlled by the infla¬ 
tionists, we trust, as,this one has been, and will devise 
some practicable scheme for resuming specie payments. 

The Financial Record was started at the instance 
of one or two gentlemen who thought something 
could be done to call public attention to the impor¬ 
tance of resuming specie payments. Something has 
been done, in the past nine months, and perhaps the 
Record and its patrons have contributed to that result. 
At all events, they have put before thousands of read¬ 
ers, in a compact form and convenient for reference, 
much financial and economical truth. This work 
which was begun by the American Social Science As¬ 
sociation, has been carried on for six months by a 
committee of gentlemen in Boston, who now lay it 
aside because so many others have engaged in it that 
their special service is no longer necessary. We there¬ 
fore bid our readers good-bye, without ceremony, but 
with the best wishes for their prosperity. 

The Iiegal-Teudur Goose. 

BY ALFRED TENNYSON. 

I knew an old wife lean and poor, 

Her rags scarce held together; 

There strode a stranger to the door, 

And it was windy weather. 

He held a goose upon his arm, 

He uttered rhyme and reason, 

“Here take the goose, and keep you warm, 

It is a stormy season.” 

She caught the green goose by the leg, 

A goose—’twas no great matter; 

The goose let fall a golden egg, 

With cackle and with clatter. 

She dropt the goose and caught the pelf, 

And ran to tell her neighbors; 

And blessed herself and cursed herself, 

And rested from her labors. 

So sitting, served by man and maid, 

She felt her heart grow prouder: 

But ah! the more the green goose laid, 

It clacked and cackled louder. 

“A quinsy choke thy cursed note!” 

Then waxed her anger stronger, 

“Go, take the goose, and wring her throat. 

I will not bear it longer.” 

Then yelped the cur and yawled the cat; 

Ran Gaffer, stumbled Gammer. 

The goose flew this way and flew that, 

And filled the house with clamor. 

As head and heels upon the floor 
They floundered altogether, 

There strode a stranger to the door, 

And it was windy weather. 

He took the goose upon his arm, 

He uttered words of scorning: 

“So keep you cold, or keep you warm, 

It is a stormy morning.” 

The wild wind rang from park and plain, 

And round the attics rumbled, 

Till all the tables danced again, 

And half the chimneys tumbled. 

The glass blew in, the fire blew out, 

The blast was hard and harder, 

Her cap blew off, her gown blew up, 

And a whirlwind cleared the larder. 

And while on all sides breaking loose 
Her household fled the danger, 

Quoth she, “The Devil take the goose, 

And God forget the stranger.” 


Financial Events and Possibilities. 

Do they mean it ? If not what do they mean ? Two 
prominent Republican members of the Illinois delega¬ 
tion voted at the last session of Congress, steadily and 
persistently for inflation. Their names are to be found 
on the list of yeas in the passage of the vetoed Senate 
bill and the still more obnoxious House bill, and in the 
list of nays on the vote upon any and every amend¬ 
ment designed to mitigate the evils of inflation. These 
gentlemen are Charles B. Farwell and Jasper D. Ward. 
Both are candidates for re-election, and both have 
made speeches since they were nominated. In view 
of the past record of these gentlemen we deem their 
utterances of sufficient consequence to be reproduced 
here. First Mr. Farwell: 

“The Republican party proposes to pay the nation¬ 
al debt in coin, and to return to specie payment at the 1 
earliest practicable period. And right here let me tell 
you what ought to be done with this financial problem 
—remove all the restrictions upon banking, withdraw 
all government supervision, repeal all usury laws, or 
relieve the banks from the effect of State usury laws, 
and if specie payment is desired without detriment to 
any class of our people, and without deranging busi¬ 
ness at all, let a small amount of the non-bearing interest 
debt of the nation be retired monthly. This will bring 
greenbacks, national bank notes, and gold nearer and 
nearer together, while the volume of national bank 
notes might and, in my opinion, would increase. Leg¬ 
islation of this kind will give the people more money 
worth to the dollar, and it would be loaned at a lower 
rate of interest. Specie payment under such a law 
would come without detriment to anybody, and would 
not be far distant.” 

We have no copy of Mr. Ward’s speech, but we 
find in the Chicago Times the following stated as the 
third article in that Congressman’s creed: 

“3. Resumption of specie payment the only way 
to financial relief and general prosperity.” 

Others may call this inconsistency if they will, we 
prefer to believe that it is conversion —the conversion of 
two politicians to what they must have believed al¬ 
ways, but from which they turned away with a mis¬ 
taken notion that they were pleasing their constituents. 
Other signs of the healthy condition of public senti¬ 
ment on the currency question in Illinois are not want¬ 
ing. The Hon. Sidney Smith, who is the Republican 
candidate for Congress in the First District, has made 
a speech in which the following passages occur: 

“There are certain fundamental principles which 
should guide every man charged with public duty in 
this regard, which all are presumed to be ready to 
speak on. For instance: gold and silver is the ac¬ 
knowledged standard of value in the commercial world, 
and no sane man would pretend that the United States 
Government, or any other Government, would be safe 
in departing from that universal standard. [Applause.] 
Hence, as all perhaps agree, or should agree, Congress 
should aim at a return to specie payment at the earliest 
practicable day. • Again, I had supposed until recent 
years, that it never was competent for a man to pay 
his own debts by giving another note for them. And 
if individuals are not allowed to pay their debts in 
this way, much less should government attempt the 

same absurdity.But, strange as it may seem, there 

are political influences at work in this country aiming 
at this—to pay our national indebtedness by issuing 
new notes. I am prepared to say this afternoon that 
any such absurd doctrine as that can never be sustained 
for a moment when it comes to be sifted. But if it 
be affirmed that Congress has the right to issue in 
times of peace, paper which should be a basis of cur¬ 
rency and legal tender in payment of debts, such a 
proposition would lead to the most alarming results. 
It would place in the hands of Congress on all occa¬ 
sions the power to increase or diminish the flow of 
legal tender money to any extent whatever—a fearful 
power, a power that a deliberative body ought not to 
possess. But gold and silver, gentlemen, has for ages 
past, been fixed upon, and conceded to be the only 
standard of value, because there is about so much to 

be had and no more.So that all I can say on this 

occasion, and all you can expect of me, is this—that 
in relation to the financial question, measures should 
be adopted calculated to advance the interest of hon¬ 
est labor and honest toil, without reference to specu- 


| lative enterprises outside of legitimate business. 
[Cheers.] And when these questions come before Con¬ 
gress, if I should be elected, I will give these subjects 
the best investigation of which I am capable, and act 
conscientiously, honestly, and fearlessly.” 

Again, there is evidence that the Democrats them¬ 
selves have changed their tone. Mr. E. A. Storrs 
lately made a Republican speech in Chicago, and that 
part of it which excited the greatest applause, was 
where he exposed the past heresies of one of the op¬ 
position candidates for Congress. Thus: 

“That gentleman (Mr. Caulfield, opposition candi¬ 
date in the 1st District,) stands upon a hard money 
platform; but I observe, from a careful reading of his 
speech, that he does not tell us whether he is in favor 
of hard money or not. He is suspiciously and myste¬ 
riously silent upon that point. But I observe, further, 
that one year ago—almost one year ago to-day—stand¬ 
ing upon this very platform, Mr. Caulfield, the chosen 
representative of the hard money men, nominated be¬ 
cause he is a hard money man, because he is utterly, 
irrevocably, unchangeably, opposed to inflation—I ob¬ 
serve that one year ago he was one of the most clam¬ 
orous inflationists in the city of Chicago. [Cheers.] 
He talked inflation from this very platform. I hope 
he is converted; but I want to know from his own 
lips that he is converted. I would like to have him 
tell us—because his experience would no doubt be 
useful for others—what course of reading, what prac¬ 
tical observation, what perspiration and bloody sweat, 
what kind of training, what system of diet, what 
method of instruction he adopted to bring [about this 
gigantic and sudden reform. [Cheers.] One year ago 
Mr. Caulfield said: “We must have more money, and 
Congress must give us more money. We have not,” 
he said, “enough money to do the business of the 
country.” And to-day he stands upon a platform in 
that particular a hard-money platform, that denounces 
inflation as one of the most dangerous of schemes. 
Now, I don’t want to treat Mr. Caulfield at all unfair¬ 
ly. But, has he changed ? What in the world will he 
do upon that question ? What would he do if he ever 
got into Congress ? It is important for us to know. 
We press for an answer. Suppose an inflation prop¬ 
osition is again presented to Congress, how would he 
vote upon it ?” 

As in the cases of Mr. Farwell and Mr. Ward, we 
hope this is a conversion, especially as inflation has 
been utterly dead ever since the veto. 

We are glad to believe that there is a good prospect 
of defeating several of the wild-cat money members 
of the House from Michigan. It is believed that Gen¬ 
eral Alpheus Williams, a hard-money man, will de¬ 
feat Mr. Field, a particularly crazy inflationist, in the 
1st District; that Mr. Burrows, another inflationist, 
now representing the Kalamazoo district, will be 
obliged to “step down and out” in favor of Mr. Pot¬ 
ter, and that Mr. Begole, a third representative of 
the same stripe, from the Lansing district, will lose 
his seat to Mr. Durand, who is for specie payments. 
There are also some chances of carrying one other 
district for hard money. 

Redemption has not been resumed, and there are no 
indications that the machinery will be in operation for 
some time to come. It is a mystery to the outside 
world where the difficulty lies. The banks have been 
called upon to make good the five per cent, fund, and 
have responded to the call. Ths receipts of the Treas¬ 
ury for some weeks, have averaged less than §125,000 
a day, and surely the clerks ought to gain rapidly upon 
such petty offerings. The vexatious delay, the de¬ 
feat of a law of Congress by real or pretended ineffi¬ 
ciency, are a disgrace to the department, and some 
way of putting an end to the existing state of affairs 
ought to be discovered at once. 

The finances of the country are in a favorable con¬ 
dition. The receipts of internal revenue during the 
month of October up to, and including the 26th inst., 
exceeded seven and three quarters millions of dollars, 
which was §600,000 more than for the whole of the 
corresponding month last year. The probability is, 




















18S 


THE FINANCIAL RECORD 


that the total receipts for the month will reach $9,000,- 
000, a figure which was exceeded in only three of 
the months of the last fiscal year. The receipts for 
the first four months will he not far from $36,000,000, 
which w r ill be a gain of three and a half millions on 
the corresponding period of last year. The customs 
receipts on the other hand, have lately fallen off some¬ 
what, but as the total imports are scarcely less than 
last year, the loss can be but small and temporary. 

The bank returns in the three great financial cen¬ 
ters, New York, Boston and Philadelphia, show that 
there is an increasing use of money and a decrease of 
reserve, though in no case have the banks yet availed 
themselves of the act which relieves them from keep¬ 
ing reserve against circulation. We compare the last 
returns with those of the third week in September, five 
weeks before: 


NEAV YORK. 

Sept. 18. Oct. 23. Differences. 

Loans.$280,569,200 $281,873,500 Inc. $ 1,304,300 

Specie. 19,952,100 13, 85,200 Dec. 6,366,900 

Legal tenders. 64,804,800 58,830,900 Dec. 5,974,0;>0 

Deposits. 236,840,800 226,304,800 Dec. 10,536,' 00 

Circulation. 25,638,600 25,013,500 Dec. 625,100 

BOSTON. 

Sept, 19. Oct. 24. Differences. 

Loans.$131,583,600 $132,246,100 Inc. $ 662,500 

Specie. 2,436,000 1,642,900 Dec. 793,100 

Legal tenders. 8,715,600 7,763,700 Dec. 951,900 

Deposits. 49,830,600 51,705,400 Inc. 1,874,800 

Circulation. 25,112,700 24,885,800 Dec. 226,900 

PHILADELPHIA. 

Sept. 19. Oct. 24. Differences. 

Loans.$ 60,904,000 $ 61,441,000 Inc. $ 537,000 

Specie. 313,600 313,300 Dec. 300 

Legal tenders. 14.568,900 13,739,200 Dec. 629,700 

Deposits. 47.482,200 3 ,462,500 Dec. 8,019,700 

Circulation. 11,485,500 11,436,600 Dec. 48,900 


Spirit of the Press. 

[Cincinnati Gazette.] 

The smart scheme of running Pendleton for the 
Presidential nomination on the inflation and repudia¬ 
tion platform, first killing off Thurman,is getting along. 
This smart internal feud has made both men unavaila¬ 
ble. Thurman has abandoned the canvass, to escape 
the taint of a repudiation and inflation platform, and 
Pendleton has been constrained to repudiate the repu¬ 
diation plank, and to declare the 5-20s payable in spe¬ 
cie, and to disown the inflation plank by confining the 
emission of new greenbacks to the sum of bank notes 
to be withdrawn. Thus he lias hamstrung the hobby 
in which he was to ride into the Presidency. 

[Cincinnati Commercial.] 

If Mr. Pendleton is to be run as the Democratic 
candidate for the Presidency on the more-rag-money 
issue, it will be necessary to give the party an Eastern 
wing, and as Pendletonism and Butlerism are under¬ 
stood to mean about the same thing, Butler must be 
remembered as the great Eastern leader. Recogniz¬ 
ing Mr. Pendleton’s title to the first place, the true 
ticket can be made up without difficulty, as follows: 

Eor President, Geo. H. Pendleton. 

For Vice President, Benjamin E. Butler. 

[Lansing (Mich.) Republican.] 

On political questions alone, there is little doubt 
that the Republicans would have carried both Ohio 
and Indiana. But the Republicans lost the Ger¬ 
man vote in Ohio by fooling with the temperance 
question; and they lost a considerable part of the 
German vote in Indiana in the same way, and also by 
fooling with inflation. The Democrats are welcome 
to all the comfort they can extract from their victo¬ 
ries. It results only in making them extravagant in 
speech and reckless in conduct, and so insures their 
subjection to Republican majorities again. They al¬ 
ready begin to talk of convulsing the commercial in¬ 
terests of the country by destroying the national 
banking system and introducing wild-cat banking. 
They will injure the credit of the country by iheir 
schemes of repudiation and tlieir war against the finan¬ 
cial stability of the nation. 

[From the Boston Herald.] 

Senator Conkling and Mr. Edwards Pierrepont, both 
intimate friends of the President, have told how he 
happened to veto the inflation bill last spring. Both 
agree that he wrote a message containing all the argu¬ 
ments and apologies in favor of inflation, intending to 
send it to Congress with the bill signed by him,but that 
when he had written the message the reasons in it for 
inflation did not seem to him sound or just,and he threw 
his work aside,and “within an hour,” as Senator Conk¬ 
ling says, wrote the vigorous veto message fpr which 
he gained so much credit with the friends of honest 
money. We do not consider it important how the 
President reached his sound views on the currency 
question, but as the point has been raised, we will give 
the version we have heard of the mysterious workings 
of the Presidential mind on this important subject. 
We have heard that the President, knowing or caring 
little about the currency, so long as it did not inter¬ 
fere with his regular drafts, believing that the reissue 
of canceled greenbacks for political effect was emi¬ 
nently right and proper, was favorably disposed to¬ 


wards the measure of inflation proposed. He fully in¬ 
tended to sign the bill, and had written a message 
giving the reasons, after his severe denunciation of the 
Boston theory of honest money, but about that time 
Jones of Nevada, the newly discovered financial star 
of the first magnitude, blazed upon the President such 
an effulgence of financial illumination, that the Presi¬ 
dent, who liked Jones as a boon companion, suddenly 
changed his mind and substituted the sound ideas of 
Jones for the senseless twaddle of the inflationists. 
We submit that this is the most reasonable version 
of the President’s mental operation, and that it was 
good fellowship rather than political economy which 
won the day. Whatever brought it about, we rejoice 
that the President changed his mind. 

[Boston Advertiser.] 

The chief characteristics of the money market are 
unaltered. Although the currency of the country is, 
as a matter of course, more fully and more profitably 
employed than it was a month or two ago, it is still in 
ample supply in our local market to meet all the reg¬ 
ular n quirements of trade; and where the security is 
undoubted it can be obtained on very reasonable terms. 
There is now very little said about there not being 
“money enough to do the business of the country,” 
and business men will probably have to wait until the 
next session of Congress before that proposition is 
satisfactorily demonstrated anew. The trouble here¬ 
abouts seems to have been rather that there has not 
J>een business enough to employ the currency of the 
country, than the reverse. It is true that it has been 
needed in many cases where it could not be obtained; 
but it may be said that if the volume of the currency 
were twice as large, the same condition of affairs would 
be observable. And this goes to show that it is not the 
volume of currency alone which makes money dear or 
cheap. As a rule, money can be obtained at any time, 
by anybody who is able to offer.for it an equally valu¬ 
able consideration. 

[Wilmington (Del.) “Every Evening.”] 

Every man who "lias ordinary political sagacity 
knows that without a particle of effort, Senator Bay¬ 
ard would be sure of re-election by a Democratic Leg¬ 
islature. That a man thus sure of renewed honors at 
the hands of his party should make earnest efforts to 
make his party’s majority large as possible is reason¬ 
able and proper. 

[Delaware State Journal.] 

We find the platform of the Republican party ab¬ 
solutely silent on the currency, while that of the Dem¬ 
ocratic party in the course of a fierce denunciation of 
the Republican party for a variety of things, charges 
it with having injured and disgraced the nation, and 
republican government, “by issuing and maintaining 
unconstitutional currency without intrinsic value, 
whose fluctuations are the constant profit of specula¬ 
tors at the cost of the laboring classes, and which de¬ 
moralizes and unsettles commerce in all its branches.” 
The Democratic Convention also thanked this State’s 
Senators for their course on this and all other ques¬ 
tions. We find, however, in the Republican resolu¬ 
tions, a similar commendation of Representative Lo¬ 
lland’s Congressional career and a recognition of that 
gentleman as a faithful public servant. We then turn to 
the record of Congress and find the two Senators voting 
against every measure of inflation. We next turn to 
the record of the votes on this question in the House of 
Representatives and we find that the Republican Con¬ 
gressman, Mr. Lofland, is an equally firm believer in 
inflation. We know that his Democratic competitor, 
Mr. Williams, is a firm believer in the financial views 
held by Senators Bayard and Saulsbury, and stands 
on the platform adopted by the convention which 
nominated him. 

[Philadelphia Ledger.] 

It is only because in all ages since paper money was 
invented, there have been men who have denied the ax¬ 
ioms of financial science that there is anything to-day in 
dispute as to the requirements of tlie United States as 
regards its currency. There are men still, who deny 
the rotundity of the earth; such persons could never 
be taught astronomy. It would be idle to entrust a 
survey for a railroad to one who disbelieved the asser¬ 
tion that twelve inches make afoot when measured up¬ 
wards as well as when measured horizontally, or who 
contended that allowance should be made for distance 
in a warm climate, and in thickly settled places. Fi¬ 
nance is an exact science in much the same way as as¬ 
tronomy. A smatterer who had mastered only the 
great principles of the moon’s motion would be puz¬ 
zled at finding that the most accurate calculations 
failed to give her true position, and he might rashly 
infer that the difference, due to his own ignorance 
of half a score of disturbing influences, all of 
which have been wholly explained, proved the sys¬ 
tem incorrect. So the amateur financier, who had 
learned by rote that an increase of irredeemable mon¬ 
ey raises prices, and who then finds a case in which 
prices did not j-ise with each issue, might abandon 
the true theory because he had not learned to take ac¬ 
count of various other considerations that have a dis¬ 
turbing effect. Certain cases of this character are 
well known to all in this region who give the least at¬ 
tention to political economy or to the question of the 
currency. There is no way of learning financial truth 


| so effectually as by studying history. Theory may be 
sneered at, but experience proves all things. 

[Cinciunati Gazette.] 

The inflation Democratic organ gives the distressing 
announcement that the great Democratic victories can 
not give the people any inflation of the currency, even 
though that party shall get the control of the House, 
for the reason that the Senate and the Administra¬ 
tion will still be Republican. This is a sad disappoint¬ 
ment; for we supposed the paper-money mills would 
be put to grinding without ceasing, and that the tail¬ 
boards would pour right into the pockets of those who 
want money. So the Democratic victory is naught. 
Pig iron has not advanced; nor has any other com¬ 
modity; nor is Wall street excited; nor are stocks 
booming. The inflation gun discharged a blank car¬ 
tridge. But business is steadily and surely improving. 
The last harvest was a good average one. The people 
are economizing and gaining strength, and thus are do¬ 
ing for themselves what the dishonest inflationists and 
repudiationists might undo but cannot facilitate. 

[N. Y. Tribune.] 

The fact is, that in neither Ohio nor Indiana were 
party lines closely drawn on currency questions. In 
Indiana both platforms were irredeemably bad, and 
the contest for the leadership of the inflationists w T as 
almost evenly balanced between Morton and Voorhees. 
In Ohio the Republican platform was unsatisfactory, 
but better than that of the Democrats. The Dem¬ 
ocrats, however, in some cases, repudiated their plat¬ 
form, and the most conspicuous triumph they won in 
Ohio—that which reversed the usual heavy Republican 
ma jority in Cleveland—was secured on the unequivocal 
hard-money declarations of Henry B. Payne. It is pos¬ 
sible that the vehement exhortations of the Cincinnati 
Enquirer , and the strong personal influence of Mr. 
Washington McLean, may have caused the campaign 
in Ohio to turn somewhat upon inflation, and have 
given the Democrats something of an advantage. In 
Indiana it is impossible that the result can have been 
affected in the slightest degree by any question of the 
currency. There is no more dangerous inflationist in 
the United States than Gov. Morton, who led the In¬ 
diana Republicans to defeat. There are few sounder 
hard-money men than Judge Thurman, who, in spite 
of the adverse platform, may fairly be reckoned the 
leader of the Ohio Democracy. 

[Cincinnati Enquirer ] 

The editor of the Plaindealer , whose platform used 
to be “More Money and More Whiskey,” seems to 
have put on Henry B. Payne’s collar since the elec¬ 
tion. 

[Detroit Evening News.] 

It is of the highest importance that the people 
stamp out any lingering embers of the inflation de¬ 
lusion. The people must remember that the present 
deplorable condition of the country is largely attrib¬ 
utable to our present debased currency. 

The State and country is full of demagogues who 
would have it appear that those who have favored any 
of the numerous inflation schemes for “more money, 5 ’ 
are especially the “friends” of the workingmen and 
the poor. The truth is exactly the reverse. 

Be it understood that the country is in infinitely 
more danger from the empirical treatment of financial 
quacks than it is from Southern traitors. 

Kalamazoo (Mich.] Telegraph.] 

We have called the attention of the Detroit Free 
Press to the fact that its rejoicing over the result of 
the Indiana and Ohio elections is hardly consistent 
with its own declarations, and those of the Demo¬ 
cratic platform, in favor of hard money and the hon¬ 
est payment of our National debt in coin. The Free 
Press has not seen fit to offer any explanation of its 
apparent inconsistency, and we must presume that it 
cannot give an explanation, and that its hard money 
doctrines are simply advocated for the purpose of 
making voters in Michigan for the Democratic party. 

[N. Y. Evening Mail.] 

The great question of the day is not “the third 
term,” or the tariff, or reconstruction, but whether 
the people of the United States are going to be led by 
demagogues,discontents and blind partisans,down into 
the bottomless pit of Repudiation. When New York 
Democrats put “Hard Money” into their platform, 
and rejoice in the election of Democratic llepudiators 
in Ohio and Indiana, they show that their platform ex¬ 
clusively is for home use, and that they had rather get 
into power by the help of llepudiators than stay out 
longer in the cold. The logic of their associations is 
stronger than the logic of their local battle cry. 

[Ciiicinuati Gazette.] 

Both in Ohio and Indiana, two questions were very 
prominent in the public mind, viz.: temperance and 
money. The Republicans in both States were against 
inflation, and in favor of temperance. These were 
leading questions in the canvass. There were otner 
questions, it is true, that had their influence, but tem¬ 
perance and finance were the dominant ones, and of 
these two, the latter predominated. This being the 
case, the verdict in Ohio and Indiana is for paper 
money, and more of it, as against hard money and 
contraction. This is a stubborn fact which it is useless 
to attempt to ignore or deny. Those who familiarized 
themselves with the canvass are prepared to speak in¬ 
telligently on this subject, and among these there is 



































THE FIHAHCIAL RECORD. 


136 


but one opinion, and that is in accordance with the 
views herein presented. In Hamilton County, notwith¬ 
standing the temperance issue, which arrayed the 
liquor interests against the Republican party, the lat¬ 
ter held its own, because the Germans, as a 61ass, are 
sound on the currency question, and both the German 
papers favor hard money. Therefore, German Repub¬ 
lican voters disliking the Democratic inflation platform 
as much as they disliked the temperance paragraph in 
the Republican, voted largely the Republican ticket. 
In the rural districts, however, it was different. 

[Traverse Bay, (Mich.) Eagle.] 

It is not impossible for the Republican party to* 
recover its lost ground in 1876. In order to do so, how¬ 
ever, it must remand the Federal office holders to their 
legitimate duties. It must cease meddling with the 
private habits of the people. It must abandon all 
schemes for inflating the currency and paying the 
bonds in greenbacks. As between the Republican party 
and the Democratic party considered as mere shells, 
the majority of the people are still Republican, but 
they are not sufficiently attached to that shell to take 
its rotten kernel also. 

[New York Nation.] 

The condition of the commercial public after a panic 
is not unlike that of an army which has been routed, 
•and the process of rallying it has to be somewhat sim¬ 
ilar. The reason why business does not revive is not 
that people have lost a good deal of money—that by 
itself is a reason why it should revive promptly; but 
that each person doubts everybody else’s solvency or 
capacity, and refuses to engage in any enterprise need¬ 
ing other people’s co-operation. At this moment there 
are loud- praises of the economies people are practis¬ 
ing, and there is no doubt that after a panic economy 
is eminently wise; but it is folly to suppose or preach 
that economy alone will set the commercial world on 
its feet. What people are saving in food or clothing 
or luxuries, would at the end of the year be a trifling 
portion of the amount of our losses, and would not in 
years make them up, and it must be remembered, too, 
that economy on a great scale aggravates a crisis by 
paralyzing numerous branches oi industry. What is 
needed to cure a panic is the combination of economy 
and industry—in other words, to fill our empty purses 
and pay our debts we must go to work again and begin 
to produce. A state of things in which nobody is buy¬ 
ing anything he can avoid, and men are letting their 
money lie at two per cent, per annum in United States 
bonds sooner than engage in any productive industry, 
is essentially sickly, and can bring neither man nor 
nation out of a financial slough. 

31 r. No rdboll’s Scheme. 

[From the Cincinnati Gazette.] 

There is a new crop of plans for resumption of specie 
payment. Mr. Charles Nordhoff has promulgated one. 
In brief, it is to retire a quarter of the greenbacks per 
year, authorizing in their stead national bank notes, 
providing that “from the day when this change begins, 
all national bank notes shall bear upon their face the 

declaration that the bank promises to pay-dollars 

to the bearer, on the 4th of March, 1884, or whatever 
date might be fixed for resumption.” Meanwhile, 
Congress shall authorize the suspension of payment by 
the banks, both in specie and greenbacks. In short, 
it is the withdrawal of the greenbacks; the authoriza¬ 
tion of bank notes to an equal amount, with a proviso 
that these and all bank notes shall be payable in specie 
at a given time. Meanwhile, an authorized suspension. 

The difference between this and a simple authoriza¬ 
tion of free banking, or of an amount of bank cur- ' 
rency equal to the greenbacks withdrawn, is that pay¬ 
ment is fixed at a certain time some years ahead, and 
meanwhile all redemption is suspended; while in the 
latter case the withdrawal of greenbacks and substitu¬ 
tion of bank notes would steadily withdraw the medi- 
. um of redemption, and this, when carried far enough, 
would force the banks to redeem in coin. Yet there 
may be a question whether anybody would call for the 
newly authorized bank notes, with the condition of 
specie payment at a fixed time. If not called for then, 
the quarterly withdrawal of the greenbacks would soon 
pinch things. 

The plan either supposes that after the lapse of a 
specified period 800 millions of paper money can be 
floated on the promise of specie payment; or that it 
will work a contraction which shall bring the currency 
nearer to the possibility of specie payment. The author 
talks of having all the world to draw specie from, to 
redeem with, whereas, when greenbacks are the re¬ 
deeming medium, the amount is limited. But it has 
been found that plentifulness of paper money always 
drives out coin, and it is a question whether a country 
which has 800 millions of paper money can draw coin 
from the world. If this plan means a contraction to 
such a degree as will draw specie, then it is simple, 
and is not essentially different from the ordinary plans 
of coming to specie by a direct contraction of the 
greenbacks. We have an idea that any successful plan 
for restoring specie payment will not need to fix a 
time of resumption; for that it should, and will, 
equalize notes and coin long before there will be a plain 
recognition of the situation by free exchange. 


_ [Cincinnati Enqnirer.] 

The fight in this last election was a square contest 
between the Republican and the Democratic parties. 
It was a triumph, not so much of any notion the Dem¬ 
ocratic party to-day entertains as of the Democratic 
party itself. It is a Democratic victory. It can not 
be urged that it is exclusively a triumph of free trade, 
though the one iron section of Ohio, in a single Con¬ 
gressional District, shows a change of nearly five 
thousand votes. Nor is it solely a currency or a li¬ 
cense triumph, or a victory for any single plank in 
the Democratic platform. It is a Democratic victory. 
It means that the Republican party is falling to pieces, 
and that the Democratic party is coming into power. 
It is not a conquest of any single idea. It is more 
than that. 

We believe that the following estimate of the next 
House of Representatives, as to its division politically, 
will be pretty near the mark when the elections are 
over: 


434 Congress. 44th Congress. 


New England. 


Rep. 

...20 

Dem. 

2 

Rep. 

19 

Dem, 
' 9 

Middle States . 


.... 53 

35 

33 

35 

Southern States. 



35 

IT 

55 

Western States .. .. 

.... 

...82 

22 

52 

72 

Totals.... 


.198 

94 

121 

171 


[N. Y. Times.] 

Now the fact is, that Ohio and Indiana—if the 
Democratic victories mean anything at all—declared 
for an indefinite expansion of the currency, the payment 
of the five-twenty bonds in greenbacks, and a substi¬ 
tution of legal-tender notes for national-bank currency. 
On this issue the Democracy of those two States claim 
to have made a gain of eleven Congressmen. But 
there is Payne, the contractionist and hard-money 
man, standing in the midst of confused welter of finan¬ 
cial heresy and ruin. The Eastern Democrat waives 
all of the eleven but Payne. The other ten are only 
valuable to swell the column of Democratic figures. 
Payne was not elected to Congress to inflate the cur¬ 
rency and repeal the act declaring the five-twenties 
payable in gold. Evidently the Democrats of this 
region think very highly of Payne. He is expected 
to neutralize the votes of the other ten Democrats who 
have been gained in the October election. We have 
a faint suspicion that he is not esteemed very highly 
by his colleagues. 

[N. Y. Herald.] 

The dread that the success of the democracy gener¬ 
ally might mean in the end the tinkering of Congress 
with our financial law, and the destruction of that 
wise policy which President Grant proclaimed in his 
veto of the great Inflation bill, is one of the principal 
obstacles against which Mr. Tilden has to contend. 
The democratic party is suspected of planning the is¬ 
sue of more irredeemable paper money, and these 
Western victories are thought to have in part been 
won upon the basis of inflation. Mr. Tilden finds this 
shadow thrown across his path. He has but one way to 
dispel it, and that is to boldly utter those words of fi¬ 
delity to the financial principles of his State, the true 
principles of the whole country, which his fellow citi¬ 
zens have a right to demand, and which Governor Dix 
in his letter to General Grant emphatically sustained. 


Our Stock of Specie. 

[From the Chicago Times.] 

It appears by the report of the United States Mint for 
the year ending on the 30th of last June, that the gold 
deposits in the mints, and assay offices during the year 
amounted to §68,861,595, and the silver deposits and 
purchases to §15,122,151; a total of §83,983,746. There 
was a considerable increase in coinage over the previous 
year. The director estimates the amount of specie in 
the country June 30, 1874, to have been §167,000,000, 
which estimate shows a gain of §38,500,000 in the stock 
of specie and bullion during the last two fiscal years. 
He also estimates the total stock of specie in the world 
at §10,000,000,000 to §12,000,000,000, and the- present 
rate of production at §180,000,000 (or about 1 1-2 per 
cent, of the existing stock), of which annual increase 
§1000,000,000 is gold, §80,000,000 is silver. Assuming 
the estimates to be approximately correct, there is 
something instructive in these figures, especially to 
those who claim that there is not gold and silver 
enough in the world to serve as a medium of exchange, 
and to those who,like Prof. Bonamy Price,think that in 
case England, France, and Germany should displace 
coin by issuing paper “it would all flow back into the 
stores and shops and be locked up.” 

In the first place, supposing the existing stock of 
specie to be midway between ten and twelve billions, 
(that is, eleven billions), and supposing the population 
of the world to be one billion three hundred millions, 
the amount of specie to each man woman and child 
on the face of the globe is about §8.46. Deducting 
from the total population the savages of this hemis¬ 
phere, of Africa, of Northern Europe and Asia, and 
of a multitude of islands, who make almost no use of 
the precious metals, and it will be quite within bounds 
to say that there is at least ten dollars of specie to 
each man, woman and child in those portions of the 
globe where gold and silver are used to any consider¬ 
able extent either as money, or for ornament, or in the 


useful arts. In the second place it appears that this 
country, although it has less than 3 1-2 per cent, of 
the population of the globe, and less than 4 per cent, 
of the inhabitants who may be supposed to use the 
precious metals, actually supplies more than 40 per 
cent, of the total annual product of those metals. And 
yet the amount of specie actually in the country is 
less than 4 per cent, per capita , or less than 40 per cent, 
of what it would be upon an equat per capita distribu¬ 
tion of the world’s total stock. We have now §167,- 
000,000, of'which not a dollar is in actual use except 
as object instead of a medium of exchange in the New 
York gold room, and for the payment of customs 
duties and interest on the public debt. Upon an equal 
per capita distribution we should have more than §400,- 
000,000, and it would be even more common than 
greenbacks are to-day. 

In the third place, it appears that we retain only a 
small portion of our annual product of gold and silver. 
Our stock has increased only §38,500,000, during the 
past two years. During the same time our mines have 
probably yielded §154,000,000 or four times the 
amount of the increase in the stock. But that is not 
all, nor the worst. In his report for 1872 Comptroller 
Knox estimated that the stock of specie in the country 
in actual circulation was §200,000,000 in 1862. The 
director of the mint estimates that it is now only §167,- 
000,000. There has, therefore, been a loss of §33,000,- 
000 during the past twelve years. In the meantime 
our mines have yielded not less than §720,000,000, 
which, if it had been retained in the country and add¬ 
ed to the stock previously existing, would have given 
us §920,000,000 of specie to-day, or §143,000,000 more 
than our total paper circulation, including even the 
fractional shinplasters. Now how comes it that while 
we have produced such an enormous amount of gold 
and silver, our stock in hand has actually decreased ? 
The answer is, we have shipped out of the country all 
we have produced, and part of the stock on hand in 
1862. But why have we shipped it ? Why has it not 
all flowed back into our stores and shops, and been 
locked up ? The reason is, because we have made 
specie relatively cheap here by substituting paper. The 
only reason why we ship anything is because it is rela¬ 
tively cheap here. It is the reason why we have ship¬ 
ped gold as much as it is the reason why we have ship¬ 
ped wheat and cotton. And Prof. Price may be as¬ 
sured that it would be just so in England, France, and 
Germany under like circumstances. Let these coun 
tries issue enough notes, and they will certainly make 
specie relatively cheap, and the specie will certainly 
flow out to countries where it is relatively dear, instead 
of flowing into the stores and shops to be locked up. 
It will be in those countries exactly as it has been here, 
if they imitate our unspeakable folly. 


The “Tall Sycamore,” 

The Cincinnati Enquirer is true to Dan Voorhees, and 
thus proclaims his fitness to be Senator, through the 
letter of an Indiana correspondent: 

I do not know of but one man that could fitly repre¬ 
sent the State of Indiana, at this time in the United 
States Senate, and that man is Hon. Daniel W. Voor¬ 
hees. Mr. Voorhees truly represents the democracy 
of Indiana. He is the only Democrat in Indiana who 
stands square with the business and laboring interests 
on the finance question. He is the only man whose 
election to that high office would make our recent vic¬ 
tory a complete success. He is the idol of the labor¬ 
ing class and of the small capitalists. No one doubts his 
honesty or his ability. Here, where he has lived for 
many years, he is loved by all, both Democrats and 
Republicans, and his election would be rejoiced at by 
all parties in Western Indiana, which section of the 
State is certainly entitled to a United States Senator, 
as it is not in the mind of the writer when it had one. 
I know that Mr. Voorhees will meet with opposition 
from McDonald, Hendricks & Co., of the Indian ipolis 
ring, but I hope, since this tide of reform has set in, 
that it will upset these designing demagogues, and all 
their well-laid plans will be washed to the whirlwinds. 
If either McDonald or Hendricks were elected, they 
would misrepresent Indiana oil the very issue that gave 
us victory, the finance question, and so outrase the 
wishes of the democracy of this State that carrying 
the State by that party two years hence would be im¬ 
possible. I am a working-man and associate with that 
class who do the voting, if not laying the wires, and I 
know just what I say. You may lead a horse to 
water, but you cannot make him drink. Our votes 
are cast now, and the Democratic party has a glorious 
victory, but if that party dare defeat the object for 
which we cast them by the election of either Joseph 
E. McDonald or Thomas A. Hendricks^ with their 
avowed opposition to the Democratic party of this 
State on the financial question, I tell you you will 
hear from us two years hence. Give us Voorhees, and 
we will give you victory. 

A few sets of the Record can be supplied by .the publisher, 
(No. 5 Pemberton Square, Boston,) at §1.00 for the 39 num¬ 
bers and 3 extras. 




























THE AMERICAN SOCIAL SCIENCE ASSOCIATION. 


This Association will continue its active work during the year 1875, according to the general plan an¬ 
nounced from time to time during the past year. So far as this plan relates to the establishment of local 
bodies, co-operating with the present Association, it may be gathered from the following votes of the Execu¬ 
tive Committee, passed in April, 1874: 

1. That it does not seem practicable to bring all organizations for the promotion of Social Science, existing 
or to be established, to the same precise form and model; but that such as are willing to become auxiliary to 
this Association shall be designated as of three main classes, namely: (1) Branch Associations, similar to that 
at Philadelphia, (2) Local Departments, and (3) Corresponding Committees. 

2. That in the Branch Associations, membership fees and assessments may be regulated according to the 
circumstances of the locality where such Association is formed; but that none shall be considered a Branch of 
the American Association until it shall have paid into our Treasury either the round sum of $300, or the an¬ 
nual sum of $15, or, in lieu of both, the value of $15 a year in publications. In consideration of such pay¬ 
ment, the President, Secretary and Treasurer, or any three members of the Branch Association, whom it may 
designate, shall be admitted as Members of the American Association, and the President shall be, ex-officio, a 
Vice-President of the American Association. 

3. That Local Departments, now existing or to be established hereafter, may adopt special fees and condi¬ 
tions for membership, as the members thereof may choose; but each Department shall pay into the Treasury 
of the American Association not less than $5 annually, in consideration of which its Chairman shall be a mem¬ 
ber of this Association, and, ex-officio, one of its Directors; and every such Department shall report its doings 
to the parent Association as often as once in three months, and once a month if required. 

4. That the Committees of Correspondence may be excused from all assessments, and may have the op¬ 
portunity of obtaining our publications at cost price, or by way of exchange for their own publications, and 
that the same privilege in respect to publications shall be extended to all members of Branch Associations and 
Local Departments. 

This plan has not been finally passed upon by the Association, and is subject to modification in its details; 
the question of accepting it being now in the hands of a Committee which will report at an adjournment of the 
Annual Meeting of October 14, to be held in Boston, Wednesday, January 13, 1875, to which all members of 
the Association are hereby invited. The following are the officers for 1875, elected at the October meeting, 
but to hold office until the Annual Meeting in January, 1876: 


President. 

Theodore D. Woolsey, New Haven, Conn. 

Vice-Presidents. 

Samuel Eliot, Boston. 

David A. Wells, Norwich, Conn. 

H. C. Lea, Philadelphia. 

Rev. Dr. James McCosh, Princeton, N. J. 

J. W. Hoyt, Madison, Wis. 

Charles I. Walker, Detroit, Mich. 

William G. Hammond, Iowa City. 

George Davidson, San Francisco. 

D. C. Gilman, Oakland, Cal. 

W. T. Harris, St. Louis. 

Secretary. 

F. B. Sanborn, Concord, Mass. 

Treasurer. 

Gamaliel Bradford, Boston, (5 Pemberton Sq. ) 

Directors. 

Emory Washburn, Cambridge. 

Charles W. Eliot, “ 

Prof. Benj. Peirce, “ 

S. G. Howe, Boston. 

T. C. Amory, “ 

C. C. Perkins, “ 


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J. M. Barnard, Boston. 

R. M. Mason, “ 

J. S. Blatchford, Boston. 

E. E. Hale, 

George T. AiJgell, 

J. M. Forbes, 

Mrs. John E. Lodge, 

Mrs. S. Parkman, 

Mrs. C. H. Dall, 

Mrs. Henry Whitman, Boston. 

Miss A. W. May, “ 

Rev. E. C. Guild, Waltham. 

Rev. Dr. E. C. Wines, New York. 

H. Villard, New York. 

Nathan Allen, Lowell. 

Arthur L. Perry, Williamstown. 

Miss Louisa Lee Schuyler, New York. 
Dorman B. Eaton, New York. 

E. Lloyd Howard, Baltimore. 

Henry B. Baker, Lansing, Mich. 

Z. R. Brockway, Detroit, Mich. 

Mrs. W. P. Lynde, Milwaukee. 

Thomas M. Logan, M. D., Sacramento, Cal. 
D. W. Wilder, Topeka, Kan. 


The Chairmen and Secretaries of the Five Departments are to be added to the above list, if not already in¬ 
cluded. They are: 

I. Department of Education, C. W. Eliot, Chairman; -, Secretary. 

II. Department of Health, Dr. Edward Wigglesworth, Boston, Chairman; Dr. D. F. Lincoln, Secretary. 

III. Department of Jurisprudence, Hon. John Wells, Boston, Chairman; James B. Thayer, Cambridge, Sec’y. 

IV. Department of Trade and Finance, David A. Wells, Chairman; Prof. W. G. Sumner, New Haven, Sec’y. 

V. Department of Social Economy, Prof. W. B. Rogers, Boston, Chairman; F. B. Sanborn, Secretary. 

1 he monthly meetings of the above officers are held at the office of the Association, which is also the office 
of the Secretary and Treasurer, 5 Pemberton Square, Boston. The next General Meeting of the Association 
will be held in Detroit, in May or June, 1875. The fee for membership is $5, and all are invited to become 
members, who feel an interest in our work. 

1 he aim of the Association is to organize and concentrate forces now working at random. A marked feature 
of the time is the desire to investigate and ameliorate the conditions of human life. But this impulse, too often 
titful and ill directed, is apt to defeat itself. Thus all competent authorities agree lhat the overflowing and 
unregulated spirit of charity is one of the most hurtful and dangerous of our social tendencies. The British 
Association, in successful operation since 1857, aims to propose suggestions of reform for the attention of the 
Ministry. Such an agency appears to be much more necessary in this country, not only from the inefficiency 
and unsteadiness of executive government, but from the want of connection between the States. Upon the 
gi eat subjects of l'inance, Taxation, Education, Jurisprudence, Health, Charities, Pauperism, Prisons, Rail¬ 
ways, Insurance, Police, &c., &c., not to speak of the lack of system in individual States, there are or may be 
thirtj-seien different systems, unconnected and without reference or advantage to each other. To bring into 
closet relations men of special talents and acquirements in different States, and, while excluding frivolities and 
crotchets, to establish general principles as against empiricism in the conduct of society, is the purpose for 

which we ask the sympathy, not only of the friends of humanity, but of every lover of his country 
Boston, Oct. 31, 1874. 









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